As filed with the Securities and Exchange Commission on May 20, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ASSOCIATED ESTATES REALTY CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Ohio 34-1747603
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
<TABLE>
<S> <C>
5025 Swetland Court, Richmond Heights, Ohio 44143-1467
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
THE AERC 401(k) SAVINGS PLAN AND TRUST
(Full title of the plan)
Jeffrey I. Friedman
Associated Estates Realty Corporation
5025 Swetland Court
Richmond Heights, Ohio 44143-1467
(Name and Address of Agent For Service)
(216) 261-5000
(Telephone Number, Including Area Code, of Agent For Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount Of
To Be To Be Price Per Offering Registration
Registered Registered(1) Share(2) Price(2) Fee
<S> <C> <C> <C> <C>
Common
Shares,
without par 45,000 $22-1/8 $995,625 $301.70
value
<FN>
(1) Pursuant to Rule 416(c) under the Securities Act of 1933, this Registration Statement
also covers an indeterminate amount of interests to be offered or sold pursuant to
the employee benefit plan described herein.
(2) The registration fee has been calculated pursuant to Rule 457(c) and (h) based on the
average of the high and low sale prices on May 16, 1997, of the Registrant's Common
Shares as reported on the New York Stock Exchange.
</FN>
</TABLE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The documents listed in (a) through (c) below are
incorporated by reference in the Registration Statement. All
documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") subsequent to the date of the filing of this
Registration Statement and prior to the filing of a post-
effective amendment that indicates that all securities registered
hereunder have been sold, or that deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference
in the Registration Statement and to be a part hereof from the
date of the filing of such documents.
(a) The Registrant's Annual Report on Form 10-K for
the year ended December 31, 1996;
(b) All other reports filed by the Registrant pursuant
to Section 13(a) or 15(d) of the Exchange Act
since the Annual Report on Form 10-K referenced
above; and
(c) The description of the Company's Common Shares
contained in the Company's Registration Statement
on Form 8-A dated October 14, 1993.
Item 6. Indemnification of Directors and Officers.
The Ohio Revised Code (the "Ohio Code") authorizes Ohio
corporations to indemnify officers and directors from liability
if the officer or director acted in good faith and in a manner
reasonably believed by the officer or director to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal actions, if the officer or director had
no reason to believe his action was unlawful. In the case of an
action by or on behalf of a corporation, indemnification may not
be made (i) if the person seeking indemnification is adjudged
liable for negligence or misconduct, unless the court in which
such action was brought determines such person is fairly and
reasonably entitled to indemnification, or (ii) if liability
asserted against such person concerns certain unlawful
distributions. The indemnification provisions of the Ohio Code
require indemnification if a director or officer has been
successful on the merits or otherwise in defense of any action,
suit or proceeding that he was a party to by reason of the fact
that he is or was a director or officer of the corporation. The
indemnification authorized under Ohio law is not exclusive and is
in addition to any other rights granted to officers and directors
under the articles of incorporation or code of regulations of the
corporation or any agreement between officers and directors and
the corporation. A corporation may purchase and maintain
insurance or furnish similar protection on behalf of any officer
or director against any liability asserted against him and
incurred by him in his capacity, or arising out of the status, as
an officer or director, whether or not the corporation would have
the power to indemnify him against such liability under the Ohio
Code.
The Registrant's Code of Regulations provides for the
indemnification of directors and officers of the Registrant to
the maximum extent permitted by Ohio law as authorized by the
Board of Directors of the Registrant and for the advancement of
expenses incurred in connection with the defense of any action,
suit or proceeding that he was a party to by reason of the fact
that he is or was a director or officer of the Registrant upon
the receipt of an undertaking to repay such amount unless it is
ultimately determined that the director or officer is entitled to
indemnification.
The Registrant maintains a directors' and officers'
insurance policy which insures the directors and officers of the
Registrant from claims arising out of an alleged wrongful act by
such persons in their respective capacities as directors and
officers of the Registrant, subject to certain exceptions.
The Registrant has entered into indemnification agreements
with its directors and officers which provide for indemnification
to the fullest extent permitted under Ohio law.
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
<S> <C>
4.1 The AERC 401(k) Savings Plan and Trust
4.2 Second Amended and Restated Articles of Incorporation of
Associated Estates Realty Corporation(1)
4.3 Code of Regulations of Associated Estates Realty
Corporation(1)
5 Opinion of Baker & Hostetler LLP as to legality of the
Common Shares
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Baker & Hostetler LLP (included in Opinion
filed as Exhibit 5 hereto)
<FN>
(1) Incorporated by reference from the Registrant's Registration Statement on Form S-11
filed June 30, 1994 (Registration No. 33-80950).
The Registrant hereby undertakes that the Plan and any amendment thereto will be
submitted to the Internal Revenue Service ("IRS") in a timely manner and all changes
required by the IRS in order to qualify the Plan will be made.
</FN>
</TABLE>
Item 9. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment
to this Registration Statement to include any
material information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to
such information in the Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933 (the "Act"), each
such post-effective amendment shall be deemed to
be a new registration statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination
of the offering.
The undersigned Registrant further undertakes that, for
purposes of determining any liability under the Act, each filing
of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act and each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described
under Item 6 above or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
<S> <C>
4.1 The AERC 401(k) Savings Plan and Trust
4.2 Second Amended and Restated Articles of Incorporation of
Associated Estates Realty Corporation(1)
4.3 Code of Regulations of Associated Estates Realty
Corporation(1)
5 Opinion of Baker & Hostetler LLP as to legality of the
Common Shares
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Baker & Hostetler LLP (included in Opinion filed
as Exhibit 5 hereto)
<FN>
(1) Incorporated by reference from the Registrant's Registration Statement on Form S-11
filed June 30, 1994 (Registration No. 33-80950).
</FN>
</TABLE>
Signatures
The Registrant. Pursuant to the requirements of the Securities
act of 1933, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Richmond Heights, State
of Ohio, on May 20, 1997.
ASSOCIATED ESTATES REALTY CORPORATION
By:/s/ Jeffrey I. Friedman
------------------------------
Jeffrey I. Friedman,Chairman
of the Board, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Jeffrey I.
Friedman, Dennis W. Bikun and Martin A. Fishman, or any one of
them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and
all pre- or post-effective amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Jeffrey I. Friedman Chairman of the Board, President May 20, 1997
----------------------- Chief Executive Officer & Director
Jeffrey I. Friedman (Principal Executive Officer)
/s/ Dennis W. Bikun Chief Financial Officer (Principal May 20, 1997
----------------------- Financial Officer and Principal
Dennis W. Bikun Accounting Officer)
/s/ Albert T. Adams Director May 20, 1997
-----------------------
Albert T. Adams
/s/Gerald C. McDonough Director May 20, 1997
-----------------------
Gerald C. McDonough
/s/ Mark L. Milstein Director May 20, 1997
-----------------------
Mark L. Milstein
/s/ Frank E. Mosier Director May 20, 1997
-----------------------
Frank E. Mosier
/s/ Richard T. Schwarz Director May 20, 1997
-----------------------
Richard T. Schwarz
/s/ Jerome Spevack Director May 20, 1997
-----------------------
Jerome Spevack
</TABLE>
The Plan. Pursuant to the requirements of the Securities Act of
1933, the trustees (or other persons who administer the employee
benefit plan) have duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Richmond Heights, State of Ohio, on
May 20, 1997.
THE AERC 401(k) SAVINGS PLAN AND
TRUST
By:/s/ Dennis W. Bikun
--------------------------
Dennis W. Bikun, Member,
Plan Committee
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Dennis W. Bikun Member, Plan Committee May 20, 1997
----------------------
Dennis W. Bikun
/s/ Lita Weiss Member, Plan Committee May 20, 1997
----------------------
Lita Weiss
/s/ Nan Zieleniec Member, Plan Committee May 20, 1997
----------------------
Nan Zieleniec
</TABLE>
PROTOTYPE 401(k) PLAN
ARTICLE I. INTRODUCTION
The Employer has established this Plan (the "Plan"),
consisting of the Adoption Agreement and the following provisions
(the "Prototype 401(k) Plan") for the exclusive benefit of
Participants and their Beneficiaries.
ARTICLE II. DEFINITIONS
Where the following words and phrases appear in this Plan,
they shall have the respective meanings set forth below, unless
their context clearly indicates a contrary meaning. The singular
herein shall include the plural, and vice versa, and the
masculine gender shall include the feminine gender, and vice
versa, where the context requires.
2.01 "Account" shall mean the Trust assets held by the
Trustee for the benefit of a Participant, which shall be the sum
of the Participant's Salary Reduction Contribution Account,
Deferred Cash Contribution Account, Employer Profit Sharing
Contribution Account, Employer Matching Contribution Account,
Nondeductible Voluntary Contribution Account, Deductible
Voluntary Contribution Account, Rollover Account and Qualified
Nonelective Contribution Account and any transfer account
established pursuant to Section 4.07 hereof with respect to funds
transferred to the Trust on the Participant's behalf.
2.02 "Act" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
2.03 "Administrator" shall mean the person or persons
specified in Section 14.01 hereof.
2.04 "Adoption Agreement" shall mean the agreement by which
the Employer has most recently adopted or amended the Plan.
2.05 "Annuity Starting Date" shall mean the first day of the
first period for which an amount is paid to a Participant (other
than loan(s) or in-service withdrawal(s)) from the Trust (whether
or not such distributions are received in the form of an
annuity).
2.06 "Applicable Life Expectancy" shall mean the life
expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and Beneficiary calculated using
the return multiples specified in Section 1.72-9 of the Treasury
Regulations. Unless the Participant elects otherwise, life
expectancies determined as of the First Required Distribution
Year shall be calculated using the attained age of the
Participant and, if applicable, the Beneficiary as of his or her
birth date in the First Required Distribution Year. Life
expectancies for subsequent calendar years shall be determined by
reducing the life expectancy determined as of the First Required
Distribution Year by one for each calendar year that has elapsed;
provided, however, that the Participant may elect prior to
April 1 of the year immediately following his or her First
Required Distribution Year to have his or her life expectancy
and, if the Participant's Beneficiary is his or her Spouse, the
life expectancy of such Beneficiary, recalculated annually. If a
Participant elects recalculation, life expectancies for each
subsequent calendar year shall be determined using the attained
ages of the Participant and, if applicable, his or her
Beneficiary, as of their respective birth dates in such calendar
year.
With respect to a Beneficiary who is entitled to receive a
distribution after the death of a Participant, "Applicable Life
Expectancy" shall mean the life expectancy of the Beneficiary
calculated using the return multiples specified in Section 1.72-9
of the Treasury Regulations as of the Beneficiary's birth date in
the calendar year in which distributions are required to
commence, and reduced by one for each subsequent calendar year.
If the Beneficiary is the Participant's Spouse, he or she may
elect, prior to the time distributions are required to commence,
to have his or her life expectancy recalculated annually. If a
Spouse so elects, his or her life expectancy for each subsequent
calendar year shall be determined as of his or her birth date in
such calendar year.
2.07 "Beneficiary" shall mean any person or legal
representative effectively designated by the Participant as a
person entitled to receive benefits on or after the death of a
Participant. Such term shall also include any person or legal
representative designated by a Beneficiary as a person entitled
to receive benefits on or after the death of such Beneficiary.
2.08 "Code" shall mean the Internal Revenue Code of 1986, as
amended. Reference to a section of the Code shall include any
comparable section or sections of future legislation that amends,
supplements or supersedes such section.
2.09 "Compensation" shall mean:
(a) except as provided in subsection (b), (c), and (d)
and subject to the limitation of subsection (e), one of the
following as elected by the Employer in the Adoption Agreement:
(i) W-2 Compensation. Information required to be
reported under Sections 6041, 6051 and 6052 of the Code (Wages,
tips and other compensation as reported on Form W-2).
Compensation is defined as wages within the meaning of Section
3401(a) and all other payments of compensation to an Employee by
the Employer (in the course of the Employer s trade or business)
for which the Employer is required to furnish the Employee a
written statement under Sections 6041(d), 6051(a)(3) and 6052.
Compensation must be determined without regard to any rules under
Section 3401(a) that limit the remuneration included in wages
based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in
Section 3401(a)(2)).
(ii) 415 Safe Harbor Compensation. "Compensation"
as defined in Section 5.05(b)(ii) of this Plan.
(iii) Safe Harbor Alternative Definition.
Compensation as defined in Section 2.09(a)(ii) above, reduced by
all of the following items (even if includible in gross income):
reimbursements or other expense allowances, fringe benefits (cash
and non-cash), moving expenses, deferred compensation, and
welfare benefits.
(iv) In the case of a Self-Employed Individual,
the determination of Compensation shall be made on the basis of
the Self-Employed Individual's Earned Income.
(b) If so specified in the Adoption Agreement, the
Employer may elect to include in the definition of Compensation
the Participant's Salary Reduction Contributions, Deferred Cash
Contributions and any other amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is
not includible in the gross income of the employee under sections
125, 402(e)(3), 402(h) or 403(b) of the Code.
(c) If so specified in the Adoption Agreement, an
Employer may elect to exclude from the definition any one or more
of the following types of compensation:
(i) additional compensation for Participants
working outside their regularly scheduled tour of duty such as
overtime pay, premiums for shift differential and call-in
premiums;
(ii) bonuses;
(iii)commissions;
(iv) such other items as specified in the Adoption
Agreement;
provided, however, that if the Employer elects an alternative
definition of Compensation pursuant to this Section 2.09(c) for
purposes of allocating Employer Profit Sharing Contributions and
forfeitures thereof, then such alternative definition must be
tested by the Administrator to show that it meets the
nondiscrimination requirements of Section 414(s)(3) of the Code.
Such alternative definition of Compensation may not be used for
purposes of Articles V, VI and XXIII.
(d) If this Plan is adopted, (i) as an amendment to an
existing plan, (ii) to remove a disqualifying provision which
results from a change in the qualification requirements of the
Code made by the Tax Reform Act of 1986 and such other
legislation as set forth in Section 1.401(b)-1(b)(2)(ii) of the
regulations under Code Section 401(b), and (iii) within the
remedial amendment period applicable to such disqualifying
provision, then for Plan Years beginning before the date such
amendment is adopted, "Compensation" shall, subject to the
limitation of subsection (e), mean compensation as defined under
the terms of the plan prior to its amendment.
(e) In addition to other applicable limitations set
forth in the Plan, and notwithstanding any other provision of the
Plan to the contrary, for Plan Years beginning on or after
January 1, 1994, the annual Compensation of each Participant
taken into account under the Plan for any determination period
shall not exceed the OBRA '93 annual compensation limit. The
OBRA '93 annual compensation limit is $150,000, as adjusted by
the Commissioner for increases in the cost of living in
accordance with Section 401(a)(17) of the Code. The cost-of-
living adjustment in effect for a calendar year applies to any
period, not to exceed 12 months, beginning in such calendar year
over which Compensation is determined ("determination period").
If a determination period is a short Plan Year (i.e., shorter
than 12 months), the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which
is 12.
In determining the Compensation of a Participant for
purposes of this limitation, the rules of Section 414(q)(6) of
the Code shall apply, except in applying such rules, the term
"family" shall include only the Spouse of the Participant and any
lineal descendants of the Participant who have not attained age
19 before the close of the year. If, as a result of the
application of such rules the OBRA '93 annual compensation limit
is exceeded, then (except for purposes of determining the portion
of Compensation up to the integration level if this Plan provides
for permitted disparity), the limitation shall be prorated among
the affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the
application of this limitation.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17)
of the Code shall mean the OBRA '93 annual compensation limit.
(f) Compensation shall be based on the amount actually
paid to the Participant during the Plan Year. To the extent
elected by the Employer in the Adoption Agreement, for purposes
of allocating Employer Profit Sharing Contributions and/or
Employer Matching Contributions and/or applying the Section
401(m) non-discrimination test, Compensation shall be based on
the amounts paid during that portion of the Plan Year during
which the Employee is eligible to participate with respect to the
allocation of such contributions. To the extent elected by the
Employer in the Adoption Agreement, for purposes of applying the
Section 401(k) non-discrimination test, Compensation shall be <PAGE>
based on the amount paid during that portion of the Plan Year
during which the Employee is eligible to make a salary reduction
election and/or to receive allocations of Deferred Cash
Contributions. Notwithstanding the preceding sentence,
compensation for the purposes of Article V (Code Section 415
Limitations on Allocations) shall be based on the amount actually
paid or made available to the Participant during the Limitation
Year. Compensation for the initial Plan Year for a new plan
shall be based upon eligible Participants' Compensation, subject
to the Adoption Agreement, from the Effective Date through the
end of the first Plan Year.
2.10 "Deductible Voluntary Contribution Account" shall mean
the separate account maintained pursuant to Section 7.03(g) for
any deductible voluntary contributions under Code Section 219
that the Participant made for 1986 and earlier calendar years and
the income, expenses, gains and losses attributable thereto.
2.11 "Deferred Cash Allocation" shall mean the contribution
payable by the Employer to the Trust on behalf of a Participant
subject to the Participant's right to elect to receive all or a
portion of such contribution in cash in lieu of having it
contributed to the Trust on his or her behalf.
2.12 "Deferred Cash Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(b) hereof
for Deferred Cash Contributions allocated to the Participant and
the income, expenses, gains and losses attributable thereto.
2.13 "Deferred Cash Contributions" shall mean contributions
to the Trust by the Employer in accordance with Section 4.02 <PAGE>
hereof.
2.14 "Designated Investment" shall mean either a collective
investment trust for the collective investment of assets of
employee pension or profit sharing trusts pursuant to Revenue
Ruling 81-100, a commingled investment vehicle for the collective
investment of assets of institutional investors, or a regulated
investment company, for which Scudder, Stevens & Clark, Inc., its
successor or any of its affiliates, acts as investment adviser
and any of which are designated by Scudder Investor Services,
Inc. or its successors as eligible for investment under the Plan.
2.15 "Designation of Beneficiary" or "Designation" shall
mean the document executed by a Participant under Article XVII.
2.16 "Disabled" or "Disability" shall mean the inability to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or last for a continuous period of 12
months or more, as certified by a licensed physician selected by
the Participant and approved by the Employer.
2.17 "Distributor" shall mean Scudder Investor Services,
Inc. or its successor.
2.18 "Earned Income" shall mean the net earnings from
self-employment in the trade or business with respect to which
the Plan is established, for which personal services of the
Owner-Employee or Self-Employed Individual are a material
income-producing factor. Net earnings will be determined without
regard to items not included in gross income and the deductions
allocable to such items, except that, for taxable years beginning <PAGE>
after December 31, 1989, net earnings shall be determined with
regard to the deduction allowed by Code Section 164(f). Net
earnings are reduced by contributions by the Employer to a
qualified plan, including this Plan, to the extent deductible
under Code Section 404.
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual Earned Income of each Participant taken into account
under the Plan for any determination period shall not exceed the
OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Section
401(a)(17) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not to exceed 12
months, beginning in such calendar year over which Earned Income
is determined ("determination period"). If a determination
period is a short Plan Year (i.e., shorter than 12 months), the
OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
In determining the Earned Income of a Participant for
purposes of this limitation, the rules of Section 414(q)(6) of
the Code shall apply, except in applying such rules, the term
"family" shall include only the Spouse of the Participant and any
lineal descendants of the Participant who have not attained age
19 before the close of the year. If, as a result of the <PAGE>
application of such rules the OBRA '93 annual compensation limit
is exceeded, then (except for purposes of determining the portion
of Earned Income up to the integration level if this Plan
provides for permitted disparity), the limitation shall be
prorated among the affected individuals in proportion to each
such individual's Earned Income as determined under this Section
prior to the application of this limitation.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17)
of the Code shall mean the OBRA '93 annual compensation limit.
2.19 "Effective Date" shall mean the date specified by the
Employer in the Adoption Agreement.
2.20 "Employee" shall mean any individual who performs
services in any capacity in the business of the Employer
(including any individual deemed to be an employee of the
Employer under Code Section 414(n) or (o)).
2.21 "Employer" shall mean the organization or other entity
named as such in the Adoption Agreement and any successor
organization or entity which adopts the Plan. If the
organization or other entity named as Employer in the Adoption
Agreement is a sole proprietorship or a professional corporation
and the sole proprietor of such proprietorship or the sole
shareholder of the professional corporation dies, then the legal
representative of the estate of such sole proprietor or
shareholder shall be deemed to be the Employer until such time
as, through the disposition of such sole proprietor's or sole
shareholder's estate or otherwise, any organization or other <PAGE>
entity succeeds to the interests of the sole proprietor in the
proprietorship or the sole shareholder in the professional
corporation.
Unless the adopting organization or entity elects otherwise
in the Adoption Agreement, any two or more organizations or
entities which are members of (a) a controlled group of
corporations (as defined under Code Section 414(b)) which
includes the adopter, (b) a group of trades or businesses
(whether or not incorporated) which are under common control (as
defined under Code Section 414(c)) which includes the adopter, or
(c) an affiliated service group (as defined under Code Section
414(m)) which includes the adopter, will be considered to be the
Employer for the purposes of the Plan. Similarly, any other
organization or entity which is required to be aggregated with
the adopter pursuant to Code Section 414(o) and the regulations
thereunder will be considered to be the Employer for the purposes
of the Plan.
2.22 "Employer Contributions" shall mean Employer Profit
Sharing Contributions, Employer Matching Contributions, Salary
Reduction Contributions, Deferred Cash Contributions, Qualified
Matching Contributions and Qualified Nonelective Contributions.
2.23 "Employer Profit Sharing Contribution Account" shall
mean the separate account maintained pursuant to Section 7.03(c)
hereof for Employer Profit Sharing Contributions allocated to the
Participant and the income, expenses, gains and losses
attributable thereto.
2.24 "Employer Profit Sharing Contributions" shall mean
contributions to the Trust by the Employer in accordance with
Section 4.03 hereof. Employer Profit Sharing Contributions may
be fixed or discretionary as provided in the Adoption Agreement.
2.25 "Employer Matching Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(d) hereof
for Employer Matching Contributions allocated to the Participant
and the income, expenses, gains and losses attributable thereto.
2.26 "Employer Matching Contributions" shall mean the
contributions made to the Trust by the Employer in accordance
with Section 4.04 hereof as matching contributions.
2.27 "Family Member" shall mean, with respect to a
particular Employee, any individual who is a Spouse, lineal
ascendant, lineal descendent, or a Spouse of a lineal ascendant
or descendent of the Employee. "Family Member" as used in this
Plan refers to an individual who is, or was during the Plan Year
in question, an Employee.
2.28 "First Required Distribution Year" shall mean:
(a) in the case of a Participant whose date of birth
is July 1, 1917 or a later date, the calendar year during which
the Participant attains age 70 1/2;
(b) in the case of a Participant (i) whose date of
birth is June 30, 1917 or an earlier date and (ii) who is not,
and has not been at any time since the calendar year during which
he or she attained age 65 1/2, a "5% owner" (as defined in Code
Section 416(i)(1)(B)(i)) of the Employer (hereinafter a "5%
owner"), the calendar year during which occurs the later of the
Participant's separation from Service or the Participant's
attainment of age 70 1/2, provided that if the Participant
continues in Service after he or she attains age 70 1/2 and later
becomes a 5% owner, such Participant's First Required
Distribution Year shall be the calendar year during which the
Participant attains the status of a 5% owner;
(c) in the case of a Participant (i) whose date of
birth is June 30, 1917 or an earlier date and (ii) who is, or has
been at sometime since the calendar year during which he or she
attained age 65 1/2, a 5% owner, the calendar year during which
the Participant attains age 70 1/2.
2.29 "Highly Compensated Employee" shall mean:
(a) any Employee who was, at any time in the look-back
year or determination year, a 5% owner;
(b) any Employee who, in the look-back year:
(i) earned more than $75,000 (as adjusted by the
Secretary of the Treasury to reflect rises in the cost of living
in accordance with Code Section 415(d)) in annual compensation,
(ii) was an officer and earned more than 50% of
the dollar limitation in effect for such year under Code Section
415(b)(1)(A); or
(iii) earned more than $50,000 (as adjusted by
the Secretary of the Treasury to reflect rises in the cost of
living in accordance with Code Section 415(d)) in annual
compensation and was among the top 20% of Employees when ranked
on the basis of compensation paid during such year.
For purposes of calculating the top 20% of Employees when
ranked on the basis of compensation paid during the look-back
year, there shall be excluded from the total number of Employees:
(A) Employees with less than six months of Service, (B) Employees
who normally work less than 17 1/2 hours per week, (C) Employees
who normally work less than six months per year, (D) except as
provided in Treasury Regulations, Employees covered by a
collective bargaining agreement, (E) Employees who have not
attained 21 years of age, and (F) Employees who are nonresident
aliens and who receive no earned income from the Employer that
constitutes income from sources within the United States;
(c) any Employee not described in paragraph (b) above
but who is described in clause (i), (ii) or (iii) of paragraph
(b) if the term "determination year" is substituted for the term
"look-back year," and the Employee is among the 100 Employees who
received the most compensation from the Employer during the
determination year; and
(d) any former Employee who has separated from Service
but who was a Highly Compensated Employee as described in
paragraph (a), (b) or (c) above when he separated from Service or
at any time after he attained age 55.
For purposes of this Section, "compensation" shall mean the
amount paid during the look-back year or determination year,
whichever is applicable, by the Employer to the Employee for
services rendered (regardless of whether the individual was a
Participant at the time) as reportable to the Federal Government
for the purpose of withholding federal income taxes and increased
by any amount to which Code Sections 125, 402(e)(3), 402(h)(1)(B)
or 403(b) apply. Also for purposes of this Section, no more than <PAGE>
50 Employees or, if lesser, the greater of three Employees or 10%
of Employees shall be treated as officers; however, if no officer
has compensation in excess of the applicable stated dollar amount
above in any year, the officer with the highest compensation
shall be treated as described in paragraph (b) or (c), as
applicable.
For this purpose, the determination year shall be the Plan
Year. The look-back year shall be the 12-month period
immediately preceding the determination year. The Employer may
elect to make the look-back year calculation for a determination
on the basis of the calendar year ending with or within the
applicable determination year, as prescribed by Section 414(q) of
the Code and the regulations issued thereunder.
If an Employee is, during a determination year or look-back
year, a Family Member of either a 5% owner who is an active or
former Employee or a Highly Compensated Employee who is one of
the ten most Highly Compensated Employees ranked on the basis of
compensation paid by the Employer during such year, then the
Family Member and the 5% owner or top-ten Highly Compensated
Employee shall be aggregated. In such case, the Family Member
and the 5% owner or top-ten Highly Compensated Employee shall be
treated as a single Employee receiving compensation and Plan
contributions or benefits equal to the sum of such compensation
and contributions or benefits of the Family Member and 5% owner
or top-ten Highly Compensated Employee. Finally, all
interpretative questions concerning whether an individual
constitutes a Highly Compensated Employee shall be resolved in a
manner consistent with Department of Treasury and Internal
Revenue Service interpretations of Code Section 414(q).
2.30 "Highly Compensated Participant" shall mean a Highly
Compensated Employee who was, at any time during the Plan Year in
question, eligible to participate in the Plan.
2.31 "Hour of Service" shall mean each hour credited to an
Employee in the applicable computation period (a 12-consecutive
month period) pursuant to subsection (a) or (b) below, as the
case may be.
(a) If the Employer has so selected in the Adoption
Agreement, Hours of Service shall be credited on the basis of
weeks of employment and the rules in paragraphs (i) through (iii)
below shall apply as modified by paragraphs (iv) and (v) below.
(i) Each Employee shall be credited with 45 Hours
of Service for each week in which the Employee would be credited
with at least one hour of service under Section 2530.200b-2 of
the Department of Labor Regulations which are incorporated herein
by reference. In the case of a week which extends into two
computation periods, the Hours of Service for such week shall be
allocated between the two computation periods on a pro rata
basis.
(ii) In the case of a payment made or due to an
Employee which is not calculated on the basis of units of time,
the number of Hours of Service to be credited shall be equal to
the amount of the payment divided by the Employee's most recent
hourly rate of compensation as determined under Section
2530.200b-2 of the Department of Labor Regulations.
(iii) No more than 501 Hours of Service shall
be credited under this Section for any single continuous period
(whether or not such period occurs in a single computation
period) during which no duties or services are performed for the
Employer (or any other corporation during a time when such
corporation was related to the Employer within the meaning of
Code Section 414), but for which the individual is paid.
(iv) The following hours shall be considered to be
hours of service for which an Employee would be credited under
Section 2530.200b-2 of the Department of Labor Regulations for
the purposes of subsection (a)(i) of this Section:
(A) An hour for which an Employee is paid,
or entitled to payment, for the performance of duties or services
for the Employer.
(B) An hour for which an Employee is paid,
or entitled to payment, by the Employer (or any other corporation
during a time when such corporation was related to the Employer
within the meaning of Code Section 414) on account of a period of
time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including Disability),
layoff, jury duty, military duty or leave of absence (unless such
payment is made or due solely to comply with applicable workman's
compensation, unemployment compensation or disability insurance
laws or solely as reimbursement for the Employee's medical
expenses).
(C) An hour for which back pay, irrespective
of mitigation of damages, is either awarded or agreed to by the
Employer (or any other corporation during a time when such
corporation was related to the Employer within the meaning of
Code Section 414). The same hours shall not be considered both
under paragraph (iv)(A) or paragraph (iv)(B), as the case may be,
and under this paragraph (iv)(C). Such hours shall be treated
under paragraphs (i) through (iii) as occurring in the
computation period or periods to which the award or agreement
pertains rather than the computation period in which the award,
agreement or payment is made.
(v) Solely for the purpose of determining whether
a One-Year Break in Service has occurred, an Employee shall be
credited with any Hours of Service which would otherwise have
been credited to such Employee but for such absence from work
during a Plan Year which commences after December 31, 1984
because of: such Employee's pregnancy, birth of a child of the
Employee, placement of an adopted child with the Employee, or
caring for a natural or an adopted child for a period beginning
immediately following birth or placement.
Hours of Service shall be credited to an Employee pursuant
to this paragraph in the manner indicated in paragraphs (i)
through (iii) above for the computation period during which such
absence begins, if the Employee would otherwise have suffered a
One-Year Break in Service and, in all other cases, in the next
following computation period. No more than 501 Hours of Service
shall be credited under this paragraph by reason of any one
placement or pregnancy. Notwithstanding any implication of this
paragraph (v) to the contrary, no credit shall be given pursuant
to this paragraph (v) unless the Employee makes a timely, written
filing with the Administrator which establishes valid reasons for
the absence and enumerates the days for which there was such an
absence.
(b) If the Employer has not selected in the Adoption
Agreement to have Hours of Service credited on the basis of weeks
of employment, Hours of Service shall mean:
(i) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the
Employer. These hours shall be credited to the Employee for the
computation period in which the duties are performed;
(ii) Each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period of
time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including Disability),
layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service shall be credited under this paragraph
for any single continuous period (whether or not such period
occurs in a single computation period). Hours under this
subsection shall be calculated and credited pursuant to section
2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by this reference;
(iii) Solely for the purpose of determining
whether a One-Year Break in Service has occurred, each hour which
normally would have been credited to an Employee (or in any case
in which such hours cannot be determined, eight hours per day of
such absence) but for an absence from work during a Plan Year
which commences after December 31, 1984 because of such
individual's pregnancy, birth of a child of the Employee,
placement of an adopted child with the Employee, or caring for an
adopted or a natural child following placement or birth. Hours
of Service shall be credited to an Employee pursuant to this
paragraph for the computation period during which such absence
begins if the individual would otherwise have suffered a One-Year
Break in Service, and in all other cases, in the immediately
following computation period. No more than 501 Hours of Service
shall be credited under this paragraph by reason of any one
placement or pregnancy. Notwithstanding any implication of this
paragraph (iii) to the contrary, no credit shall be given under
this paragraph (iii) unless the Employee makes a timely, written
filing with the Administrator which establishes valid reasons for
the absence and enumerates the days for which there was such an
absence;
(iv) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer. The same Hours of Service shall not be credited both
under paragraph (i), (ii) or (iii), as the case may be, and under
this paragraph (iv). These hours shall be credited to the
Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which
the award, agreement or payment is made.
(c) (i) Where the Employer maintains the plan of a
predecessor employer, service for such predecessor employer shall
be treated as Service of the Employer. Where the Employer does
not maintain the plan of a predecessor employer, employment by a
predecessor employer, upon the written election of the Employer
made in a uniform and non-discriminatory manner, shall be treated
as Service for the Employer.
(ii) If the Employer is a member of (A) a
controlled group of corporations (as defined under Code Section
414(b)), (B) a group of trades or businesses (whether or not
incorporated) which are under common control (as defined under
Code Section 414(c)), or (C) an affiliated service group (as
defined under Code Section 414(m)), all service of an Employee
for any member of such a group, or for any other entity required
to be aggregated with the Employer pursuant to Code
Section 414(o) and the regulations thereunder, shall be treated
as if it were Service for the Employer for purposes of this
Section.
(iii) Except as provided below, service of any
Employee who is considered a leased employee of the Employer
under Code Section 414(n)(2) shall be treated as if it were
Service for the Employer for purposes of this Section. However,
qualified plan contributions or benefits provided by the leasing
organization which are attributable to services performed for the
Employer shall be treated as provided by the Employer. The
provisions of this paragraph shall not apply to any leased
employee if such individual:
(A) is covered by a money purchase pension
plan maintained by the leasing organization providing:
(1) a non-integrated employer
contribution rate of at least 10% of compensation (as defined in
Code Section 415(c)(3), but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Code
Section 125, 402(e)(3), 402(h), or 403(b),
(2) immediate participation for leasing
organization employees who earn more than $1,000 in a year (other
than employees who perform substantially all their services for
the organization), and
(3) full and immediate vesting, and
(B) is a member of a group of leased
employees which in the aggregate does not constitute more than
20% of the Employer's non-highly compensated work force (within
the meaning of Code Section 414(n)(5)(C)(ii)).
(C) For purposes of this Section, the term "leased
employee" means any person who is not an Employee and who,
pursuant to an agreement between the recipient and any other
person, has performed services for the Employer (or for the
Employer and related persons determined in accordance with Code
Section 414(n)(6)) on a substantially full-time basis for a
period of at least one year and such services are of a type
historically performed by employees in the business field of the
Employer.
2.32 "Integration Level" for a Plan Year shall mean the
lesser of the Social Security Wage Base (as in effect on the
first day of the Plan Year) or the dollar amount specified in the
Adoption Agreement.
2.33 "Integration Rate" for the Plan Year shall mean the
lesser of the Maximum Disparity Rate (as in effect on the first
day of the Plan Year) or the rate specified in the Adoption
Agreement.
2.34 "Loan Trustee" shall mean the person named in the
Adoption Agreement to act as trustee solely for the purpose of
administering the provisions of Article XII and holding the Trust
assets to the extent that they are invested in loans pursuant to
such Article. Loan assets shall be held in a separate trust if
the person named as Loan Trustee is not the same person as the
person named as Trustee. Scudder Trust Company will not act as
Loan Trustee unless it specifically agrees in writing to act as
such.
2.35 "Maximum Disparity Rate" shall mean the rate determined
in accordance with paragraphs (a), (b) or (c) and (d) below.
(a) If the Integration Level selected by the Employer
in the Adoption Agreement is equal to the Social Security Wage
Base or does not exceed the greater of $10,000 or 20 percent of
the Social Security Wage Base, then, except as provided in (d)
below, the Maximum Disparity Rate is equal to the greater of
(i) 5.7 percent or (ii) the OASDI Rate.
(b) If the Integration Level selected by the Employer
in the Adoption Agreement exceeds the greater of $10,000 or 20
percent of the Social Security Wage Base but is less than or
equal to 80 percent of the Social Security Wage Base, then,
except as provided in (d) below, the Maximum Disparity Rate is
equal to the greater of (i) 4.3 percent or (ii) the OASDI Rate
multiplied by a fraction the numerator of which is 4.3 and the
denominator of which is 5.7.
(c) If the Integration Level selected by the Employer
in the Adoption Agreement exceeds 80 percent of the Social
Security Wage Base but is less than the Social Security Wage
Base, then, except as provided in (d) below, the Maximum
Disparity Rate is equal to the greater of (i) 5.4 percent or
(ii) the OASDI Rate multiplied by a fraction the numerator of
which is 5.4 and the denominator of which is 5.7.
(d) If allocations for a Plan Year are made on an
integrated basis pursuant to Section 4.03(b)(ii) and the
provisions of Section 23.03 are applicable for such Plan Year,
then for purposes of determining the Integration Rate as applied
to limit allocations under Section 4.03(b)(ii), the Maximum
Disparity Rate determined in accordance with paragraph (a), (b)
or (c) above shall be reduced by 3 percent. If the Employer has
elected in the Adoption Agreement to make a 4 percent minimum
allocation pursuant to Section 23.07(b), then 4 percent shall be
substituted for 3 percent in the preceding sentence.
2.36 "Nondeductible Voluntary Contribution Account" shall
mean the separate account maintained pursuant to the Section
7.03(e) hereof for Nondeductible Voluntary Contributions made by
the Participant and the income, expenses, gains and losses
attributable thereto.
2.37 "Nondeductible Voluntary Contributions" shall mean all
contributions by Participants which are not deductible voluntary
contributions under Code Section 219, Rollover Contributions, or
contributions of accumulated deductible employee contributions
(as defined in Code Section 72(o)(5)).
2.38 "Non-Highly Compensated Employee" shall mean an
Employee who is neither a Highly Compensated Employee nor a
Family Member of a Highly Compensated Employee.
2.39 "Non-Highly Compensated Participant" shall mean a
Non-Highly Compensated Employee who was, at any time during the
Plan Year in question, eligible to participate in the Plan.
2.40 "Normal Retirement Date" or "Normal Retirement Age"
shall mean the date selected by the Employer in the Adoption
Agreement.
2.41 "OASDI Rate" for a Plan Year shall mean that portion of
the tax rate under Code Section 3111(a) in effect on the first
day of the Plan Year which is attributable to old-age insurance.
2.42 "One-Year Break in Service" shall mean a
12-consecutive-month period in which an Employee does not
complete more than 500 Hours of Service unless the number of
Hours of Service specified in the Adoption Agreement for purposes
of determining a Year of Service is less than 501, in which case
a 12-consecutive-month period in which an Employee has fewer than
that number of Hours of Service shall be a One-Year Break in
Service. The computation period over which One-Year Breaks in
Service shall be measured shall be the same computation period
over which Years of Service are measured.
2.43 "Owner-Employee" shall mean an Employee who is a sole
proprietor adopting this Plan as the Employer, or who is a
partner owning more than 10% of either the capital or profits
interest of a partnership adopting this Plan as the Employer.
Solely for the purposes of Article XII hereof, an Owner-Employee
shall also mean an Employee who owns (or is considered as owning
within the meaning of Code Section 318(a)(1)) on any day during
the Year, more than 5% of the Employer if the Employer is an
electing small business corporation.
2.44 "Participant" shall mean an Employee who is eligible to
participate in the Plan under Article III (other than, if this
Plan is adopted as a nonstandardized plan, a Self-Employed
Individual who elects not to be a Participant in the Plan) and
any other person (including former Employees) with respect to
whom any Account exists under the Plan.
2.45 "Plan" shall mean this 401(k) Plan and Adoption
Agreement.
2.46 "Plan Year" shall mean the fiscal year of the Employer
or a different 12-consecutive-month period as specified in the
Adoption Agreement. A Plan Year may consist of less than a
12-consecutive-month period in the case of the initial Plan Year
or a short Plan Year resulting from a change in Plan Year.
2.47 "Prototype 401(k) Plan" shall mean these Articles I to
XXV.
2.48 "Qualified Matching Contributions" shall mean
contributions made to the Trust by the Employer in accordance
with Section 6.03(c) hereof on behalf of Non-Highly Compensated
Participants to enable the Plan to satisfy one or more of the
non-discrimination tests set forth in Article VI. Qualified
Matching Contributions are subject to full and immediate vesting
and are distributable only in accordance with the distribution
provisions, other than hardship distributions, that are
applicable to Deferred Cash Contributions and Salary Reduction
Contributions. The term "Qualified Matching Contributions"
could, at the election of the Administrator, also apply to
Employer Matching Contributions if such contributions are subject
to full and immediate vesting and are distributable only in
accordance with the distribution provisions, other than hardship
distributions, that are applicable to Deferred Cash Contributions
and Salary Reduction Contributions.
2.49 "Qualified Nonelective Contributions" shall mean
contributions made to the Trust by the Employer in accordance
with Section 6.02(c) hereof on behalf of Non-Highly Compensated
Participants to enable the Plan to satisfy one or more of the
non-discrimination tests set forth in Article VI. Qualified
Nonelective Contributions are subject to full and immediate
vesting and are distributable only in accordance with the
distribution provisions, other than hardship distributions, that
are applicable to Deferred Cash Contributions and Salary
Reduction Contributions. The term "Qualified Nonelective
Contributions" could, at the election of the Administrator, also
apply to Employer Profit Sharing Contributions if such
contributions are subject to full and immediate vesting and are
distributable only in accordance with the distribution
provisions, other than hardship distributions, that are
applicable to Deferred Cash Contributions and Salary Reduction
Contributions.
2.50 "Qualified Nonelective Contribution Account" shall mean
the separate account maintained pursuant to Section 7.03(f)
hereof for Qualified Matching Contributions and Qualified
Nonelective Contributions allocated to the Participant and the
income, expenses, gains and losses attributable thereto.
2.51 "Rollover Account" shall mean the separate account
maintained pursuant to Section 7.03(h) hereof for any Rollover
Contributions made by the Participant and the income, expenses,
gains and losses attributable thereto.
2.52 "Rollover Contributions" shall mean contributions made
to the Trust by Participants in accordance with Section 4.06
hereof.
2.53 "Salary Reduction Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(a) hereof
for Salary Reduction Contributions made on behalf of the
Participant and the income, expenses, gains and losses
attributable thereto.
2.54 "Salary Reduction Contributions" shall mean
contributions made to the Trust by the Employer in accordance
with Section 4.01 hereof as a result of the election by
Participants to contribute part of their Compensation.
2.55 "Self-Employed Individual" shall mean an Employee who
has Earned Income for the taxable year from the trade or business
for which the Plan is established or would have had earned income
but for the fact that the trade or business had no net profits
for such year.
2.56 "Service" shall mean employment by the Employer and, if
the Employer is maintaining the plan of a predecessor employer,
or if the Employer is not maintaining the plan of a predecessor
employer but has so elected in the manner described in
Section 2.31 above, employment by such predecessor employer.
2.57 "Social Security Wage Base" for a Plan Year shall mean
the maximum amount of annual earnings which may be considered
wages under Code Section 3121(a)(1) as in effect on the first day
of such Plan Year for purposes of the old-age, survivors, and
disability insurance under Code Section 3111(a).
2.58 "Sponsor" shall mean any of the organizations (a) which
have requested a favorable opinion letter from the National
Office of the Internal Revenue Service for this Plan or (b) to
which a favorable opinion letter for this Plan has been issued by
the National Office of the Internal Revenue Service.
2.59 "Spouse" shall mean the Spouse or surviving Spouse of
the Participant, provided that a former Spouse will be treated as
the Spouse and a current Spouse will not be treated as the Spouse
to the extent provided under a qualified domestic relations order
(as defined in Code Section 414(p)).
2.60 "Trust" shall mean any trust established under Article
XIII of this Plan for investment of the assets of the Plan. If
more than one Trust is established under Article XIII, references
herein to the Trust shall, as the context requires, refer to each
such Trust, separately or all such Trusts, collectively.
2.61 "Trust Fund" shall mean with respect to a Trust the
contributions to such Trust and any assets into which such
contributions shall be invested or reinvested in accordance with
Sections 13.01 and 13.03 of this Plan. If more than one Trust is
established under Article XIII, references herein to the Trust
Fund shall refer to the Trust Fund of each such Trust,
separately, or all such Trusts, collectively, as the context
requires.
2.62 "Trustee" shall mean, with respect to each Trust, the
person or persons, including any successor or successors thereto,
named in the Adoption Agreement to act as trustee of the such
Trust and hold the assets of such Trust in accordance with
Article XIII hereof. If more than one Trust is established under
Article XIII, references herein to the Trustee shall, as the
context requires, refer to the Trustee or Trustees of each such
Trust.
2.63 "Valuation Date" shall mean the last day of each Plan
Year and such other date(s) as may be designated by the
Administrator from time to time.
2.64 "Vesting Years" shall be measured on the
12-consecutive-month computation period specified in the Adoption
Agreement.
(a) A Participant will have a Vesting Year during any
such computation period if the Participant completes the number
of Hours of Service selected in the Adoption Agreement for
purposes of computing a Year of Service.
(b) When determining Vesting Years, unless the
Employer has otherwise specified in the Adoption Agreement, there
shall be excluded: (i) if this Plan is a continuation of an
earlier plan which would have disregarded such service, Service
before the first Plan Year to which the Act is applicable; (ii)
Service before the first Plan Year in which the Participant
attained age 18 and (iii) Service before the Employer maintained
this Plan or a predecessor plan.
2.65 "Year" shall mean the fiscal year of the Employer.
2.66 "Year of Service" shall be measured on the
12-consecutive-month period computation period specified in the
Adoption Agreement during which the Employee completes the number
of Hours of Service specified in the Adoption Agreement. The
initial date of employment or reemployment is the first day on
which the Employee performs an Hour of Service. If the Employer
specifies in the Adoption Agreement that the computation period
after the initial computation period shall be the Plan Year which
begins after the Employee's initial date of employment or
reemployment, an Employee who is credited with the requisite
number of Hours of Service in both the initial computation period
and in the Plan Year which begins after the Employee's date of
employment or reemployment shall be credited with two Years of
Service.
ARTICLE III. ELIGIBILITY
3.01 Entry. Each Employee of the Employer, who on the
Effective Date of this Plan meets the conditions specified in the
Adoption Agreement, shall become eligible to participate in the
Plan commencing with the Effective Date. Each other Employee of
the Employer, including future Employees, shall become eligible
to participate in the Plan when the eligibility requirements
specified in the Adoption Agreement are met. For the purposes of
this Plan's eligibility requirements, the exclusion concerning
Employees who are covered by collective bargaining agreements
applies to individuals who are covered by a collective bargaining
contract between the Employer and Employee Representatives if
contract negotiations considered retirement benefits in good
faith, unless such contract specifically provides for
participation in the Plan. For the purposes of this Section,
"Employee Representatives" shall mean the representatives of an
employee organization which engages in collective bargaining
negotiations with the Employer provided that, owners, officers,
and executives of the Employer do not comprise more than 50% of
the employee organization's membership.
3.02 Interrupted Service. All Years of Service with the
Employer are counted towards eligibility except that if the
Employer has specified in the Adoption Agreement that more than
one Year of Service is required before becoming a Participant
eligible to receive allocations of Employer Matching
Contributions and/or Employer Profit Sharing Contributions, and
if the individual has a One-Year Break in Service before
satisfying the relevant eligibility requirement, Service before
such break will not be taken into account for purposes of
determining when the individual is eligible to receive
allocations of Employer Matching Contributions and/or Employer
Profit Sharing Contributions once the individual returns to the
employ of the Employer. A former Employee who has met the entry
requirements and who terminates Service with the Employer prior
to becoming a Participant, or a former Participant, shall become
a Participant immediately upon return to the employ of the
Employer as a member of an eligible class of Employees.
3.03 Transfer to Eligible Class. In the event an Employee
who is not a member of an eligible class of Employees becomes a
member of an eligible class, such Employee shall participate
immediately if such Employee has satisfied the minimum age and
Service requirements and would have previously become a
Participant had he or she been a member of an eligible class
throughout the period of employment with the Employer.
3.04 Determination by Administrator. The Administrator
shall have the discretionary authority to determine an Employee's
eligibility to participate in the Plan and shall notify each
Employee upon his or her admission as a Participant in the Plan.
ARTICLE IV. CONTRIBUTIONS
4.01 Salary Reduction Contributions. If selected by the
Employer in the Adoption Agreement, the Employer will make a
Salary Reduction Contribution (for allocation to the eligible
Participant's Salary Reduction Account) on behalf of each
Participant who both has elected to have a portion of the
Compensation which would otherwise have been paid to him or her
for the Plan Year contributed to the Trust and has received
Compensation during the Plan Year. With respect to such elective
contributions, the following provisions shall apply:
(a) an Employee shall be given an opportunity to
elect, prior to the date as of which he or she becomes eligible
in accordance with procedures set by the Administrator, to have
Salary Reduction Contributions made on his or her behalf or, in
the case of an Employee who becomes eligible immediately upon
becoming an Employee, as soon as is administratively possible
following his or her initial date of eligibility;
(b) Participants shall be given opportunities to elect
to commence having Salary Reduction Contributions made on their
respective behalves at such other time or times as the
Administrator designates;
(c) such elections may only be made on a prospective
basis and pursuant to written, salary reduction agreements
between the Employee and the Employer;
(d) each such written, salary reduction agreement
shall be in such form and subject to such rules as the
Administrator may prescribe, and the agreement shall specify the
percentage or amount of Compensation that the Participant desires
to contribute (but in no event may such contribution exceed the
percentage of Compensation specified in the Adoption Agreement);
(e) a salary reduction agreement may be amended or
terminated prospectively during the Plan Year at such times and
in such manner as permitted by rules prescribed by the
Administrator;
(f) Salary Reduction Contributions made on behalf of a
Participant shall be in an amount equal to the percentage or
amount of Compensation specified in the eligible Participant's
salary reduction agreement; provided, however, that at any time
during a Plan Year the Administrator may reduce the rate of
Salary Reduction Contributions to be made on behalf of any
Participant for the remainder of the Plan Year to the extent the
Administrator determines necessary to comply with the limitations
of Section 4.08, and Articles V and VI hereof. Any amount which
cannot be contributed to the Trust because of those limitations
shall be paid to the Participant in cash and such payment shall
be subject to federal income and other tax withholding by the
Employer.
4.02 Deferred Cash Contributions. If selected by the
Employer in the Adoption Agreement, the Employer will make a
Deferred Cash Contribution on behalf of each eligible Participant
(as determined in accordance with the Adoption Agreement), in an
amount equal to the Deferred Cash Allocation specified in the
Adoption Agreement, as expressed as a percentage of such
Participant's Compensation.
With respect to Participants' elections not to have amounts
contributed, the following provisions shall apply:
(a) each Participant shall be afforded a reasonable
opportunity to elect not to have Deferred Cash Allocations
contributed to the Trust on his or her behalf at least once
during each Plan Year and at such other time or times as the
Administrator elects;
(b) such elections may only be made pursuant to
written agreements between the Participant and the Employer;
(c) each such written agreement shall be in such form
and subject to such rules as the Administrator may prescribe, and
the election shall specify the amount of the Deferred Cash
Allocation that the Participant desires to receive in cash; and
(d) the amount which a Participant has elected to
receive in cash pursuant to such an election shall be paid to the
Participant by the Employer no later than the last day on which
the Deferred Cash Contributions for the Plan Year in question
must be paid to the Trust under Section 7.02 hereof.
Notwithstanding the above, the Deferred Cash Contribution
otherwise to be made for a Participant may be reduced to the
extent necessary to comply with the limitations of Section 4.08
hereof and shall be reduced to the extent necessary to comply
with the limitations of Articles V and VI hereof. Any amount
which cannot be contributed to the Trust because of those
limitations shall be paid to the Participant in cash and such
payment shall be subject to federal income and other tax
withholding by the Employer.
4.03 Employer Profit Sharing Contributions. If selected by
the Employer in the Adoption Agreement, for each Plan Year, the
Employer will contribute, as Employer Profit Sharing
Contributions, either a fixed amount or the amount determined by
it in its discretion. Employer Profit Sharing Contributions,
plus any forfeitures under Section 8.02 hereof, for a Plan Year
shall be allocated as of the last day of such Plan Year among the
Employer Profit Sharing Contribution Accounts of eligible
Participants (as determined in accordance with the Adoption
Agreement), as follows:
(a) If a non-integrated formula is elected in the
Adoption Agreement, such contribution and forfeitures shall be
allocated to the Employer Profit Sharing Contribution Account of
each eligible Participant in the ratio that each such
Participant's Compensation for the Plan Year bears to the total
Compensation paid to all eligible Participants for the Plan Year;
and
(b) If an integrated formula is elected in the
Adoption Agreement, such contributions and forfeitures shall be
allocated in the following steps:
(i) First, Employer Profit Sharing Contributions
and forfeitures will be allocated to the Employer Profit Sharing
Contribution Account of each eligible Participant in the ratio
that the sum of each such Participant's Compensation and
Compensation in excess of the Integration Level for the Plan Year
bears to the sum of Compensation and Compensation in excess of
the Integration Level for all such eligible Participants for the
Plan Year, provided that the amount so credited to any such
Participant's Employer Profit Sharing Contribution Account for
the Plan Year shall not exceed the product of the Integration
Rate times the sum of the Participant's Compensation and
Compensation in excess of the Integration Level for the Plan
Year. For purposes of this step, in the case of any Participant
who has exceeded the cumulative permitted disparity limit
described below, two times such Participant s Compensation for
the Plan Year will be taken into account.
(ii) Next, any remaining Employer Profit Sharing
Contributions and forfeitures will be allocated to the Employer
Profit Sharing Contribution Account of each eligible Participant
in the ratio that each such Participant's Compensation for the
Plan Year bears to the total Compensation paid to all eligible
Participants for the Plan Year.
(c) Overall permitted disparity limits.
(i) Annual overall permitted disparity limit:
Notwithstanding the preceding paragraphs, for any Plan Year this
Plan benefits any Participant who benefits under another
qualified plan or simplified employee pension, as defined in
Section 408(k) of the Code, maintained by the Employer that
provides for permitted disparity (or imputes disparity), Employer
contributions and forfeitures will be allocated pursuant to the
provisions of Section 4.03(a) rather than 4.03(b).
(ii) Cumulative permitted disparity limit:
Effective for Plan Years beginning on or after January 1, 1995,
the cumulative permitted disparity limit for a Participant is 35
total cumulative permitted disparity years. Total cumulative
permitted years means the number of years credited to the
Participant for allocation or accrual purposes under this Plan,
any other qualified plan or simplified employee pension plan
(whether or not terminated) ever maintained by the Employer. For
purposes of determining the Participant s cumulative permitted
disparity limit, all years ending in the same calendar year are
treated as the same year. If the Participant has not benefited
under a defined benefit or target benefit plan for any year
beginning on or after January 1, 1994, the Participant has no <PAGE>
cumulative disparity limit.
4.04 Employer Matching Contributions.
(a) If selected by the Employer in the Adoption
Agreement, the Employer will make an Employer Matching
Contribution (for allocation together with forfeitures under
Section 8.02 below) to the Participant's Employer Matching
Contribution Account on behalf of each eligible Participant (as
determined in accordance with the Adoption Agreement) for each
Plan Year that a contribution within one or more of the
contribution categories selected by the Employer in the Adoption
Agreement (i.e., Salary Reduction Contributions, Deferred Cash
Contributions, or Nondeductible Voluntary Contributions) is
allocated to such Participant's Account. The Employer Matching
Contribution made for an eligible Participant shall be in an
amount determined in accordance with the Adoption Agreement and
shall be allocated in the manner specified in the Adoption
Agreement.
(b) Notwithstanding any implication of the preceding
subsection (a) to the contrary, the Employer Matching
Contribution otherwise to be made for a Participant may be
reduced to the extent necessary to comply with the limitations of
Section 4.08 hereof and shall be reduced to the extent necessary
to comply with the limitations of Articles V. Any amount which
cannot be contributed to the Trust because of these limitations
will be retained by the Employer, and the Employer shall have no
obligation to contribute such amount to the Trust.
4.05 Nondeductible Voluntary Contributions. If, in the
Adoption Agreement, the Employer has specified that Participants
may make Nondeductible Voluntary Contributions, a Participant may
make such contributions to his or her Account; provided, however,
that a Participant's right to make such contributions shall be
subject to the conditions and limitations specified below:
(a) The aggregate amount of a Participant's
Nondeductible Voluntary Contributions shall not cause the Annual
Addition (as defined in Section 5.05(a) hereof) to his or her
Account to exceed the limitations set forth in Article V.
(b) A Participant's Nondeductible Voluntary
Contributions shall be allocated to his or her Nondeductible
Voluntary Contribution Account under Section 7.03(e) hereof.
(c) At any time during a Plan Year, the Administrator
may cause a Participant to reduce the rate of his or her
Nondeductible Voluntary Contributions for the remainder of the
Plan Year to the extent the Administrator determines necessary to
comply with the limitations of Article V and VI hereof.
4.06 Rollover Contributions. The Administrator may, in its
discretion, direct the Trustee to accept a Rollover Contribution
upon the express request of an Employee wishing to make such
Rollover Contribution, subject to the consent of the Trustee if
the contribution includes property other than cash. A Rollover
Contribution shall mean a contribution which is an "eligible
rollover distribution" within the meaning of Code Section
402(c)(4) or a "rollover contribution" within the meaning of Code
Section 408(d)(3)(A)(ii) and which satisfies all applicable
provisions of the Code. Each Rollover Contribution made by an
Employee shall be allocated to his or her Rollover Account
pursuant to Section 7.03(h) hereof. Such Rollover Account shall
be invested by the Trustee as part of the Trust Fund, pursuant to
Article XIII hereafter. An Employee may make a contribution
under this Section 4.06 whether or not he or she has satisfied
the age and service participation requirements set forth in the
Adoption Agreement. An Employee who makes a contribution under
this Section 4.06 and does not otherwise qualify as a Participant
is, nevertheless, deemed to be a Participant for the limited
purpose of administering that contribution.
The Administrator may, in its discretion, accept accumulated
deductible employee contributions (as defined in Code Section
72(o)(5)) that were distributed from a qualified retirement plan
and rolled over pursuant to Code Sections 402(c), 403(a)(4), or
408(d)(3). The rolled over amount will be added to the
Participant's Deductible Voluntary Contribution Account.
4.07 Transfers from Other Qualified Plans. The
Administrator may, in its discretion, direct the Trustee to
accept the transfer of any assets held for a Participant's
benefit under a qualified retirement plan of a former employer of
such Participant. Such a transfer shall be made directly between
the trustee or custodian of the former employer's plan and the
Trustee in the form of cash or its equivalent, and shall be
accompanied by written instruction showing separately the portion
of the transfer attributable to types of contributions made by
the former employer and pre-tax and after-tax contributions made
by the Participant, respectively. Separate written instructions
delivered by the Administrator shall identify the portion of the
transferred funds, if any, attributable to any period during
which the Participant participated in a defined benefit plan,
money purchase pension plan (including a target benefit plan),
stock bonus plan or profit sharing plan which would otherwise
have provided a life annuity form of payment to the Participant.
The Trustee and recordkeeper shall be entitled to rely on such
written instructions with respect to the character of the
transferred funds. Except as otherwise provided in Article XXIV,
the amounts transferred shall be allocated to separate accounts
as provided in Section 7.03 that match the character of the
transferred funds.
4.08 Limitations on Contributions. During a Plan Year,
Employer Profit Sharing Contributions and Employer Matching
Contributions may not, in the aggregate, exceed (a) 15% (or such
larger percentage as may be permitted by the Code as a current
deduction to the Employer with respect to any Plan Year) of the
total Compensation (disregarding any exclusion from Compensation
specified by the Employer in the Adoption Agreement) paid to, or
accrued by the Employer for, Participants for the Year ending in
the Plan Year, less (b) any amounts contributed as Salary
Reduction Contributions and Deferred Cash Contributions, plus (c)
any unused pre-'87 credit carryovers. For this purpose, a
"pre-'87 credit carryover" is the amount by which Employer
Contributions for a previous Year which commenced before
January 1, 1987 were less than 15% of the total Compensation
(disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid or accrued by the
Employer to Participants for such Year, but such unused pre-'87
credit carryover shall in no event permit the Employer
Contributions for a Year to exceed 25% (or such larger percentage
as may be permitted by the Code as a deduction to the Employer)
of the total Compensation (disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement)
paid or accrued by the Employer to Participants for the Year
ending in the Plan Year in question.
4.09 Deductible Voluntary Contributions. This Plan will not
accept deductible voluntary contributions for taxable years
beginning after December 31, 1986. Deductible voluntary
contributions made in prior taxable years shall be maintained in
the Participant's Deductible Voluntary Contribution Account and
shall share in the gains and losses of the Trust Fund in
accordance with Section 8.02(e). No part of a Participant's
Deductible Voluntary Contribution Account may be used to purchase
life insurance. A Participant may withdraw all or a portion of
his or her Deductible Voluntary Contribution Account in
accordance with Section 11.01.
ARTICLE V. CODE SECTION 415 LIMITATIONS ON
ALLOCATIONS
5.01 Employers Maintaining No Other Plan.
(a) If a Participant does not participate in, and has
never participated in another qualified plan, a welfare benefit
fund (as defined in Code Section 419(e)), an individual medical
account (as defined in Code Section 415(1)(2)), or a simplified
employee pension (as defined in Code Section 408(k)) maintained
by the Employer, the amount of the Annual Addition which may be
credited to the Participant's Account for any Limitation Year
shall not exceed the lesser of the Maximum Permissible Amount or
any other limitation contained in the Plan.
(b) If the Employer Contribution (including any
forfeitures) that would otherwise be allocated to a Participant's
Account would cause the Annual Addition for the Limitation Year
to exceed the Maximum Permissible Amount, the amount allocated
will be reduced so that any Excess Amount shall be eliminated
and, consequently, the Annual Addition for the Limitation Year
will equal the Maximum Permissible Amount.
(i) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine
the Maximum Permissible Amount for a Participant on the basis of
a reasonable estimation of the Participant's Compensation for the
Limitation Year, uniformly determined for all Participants
similarly situated.
(ii) As soon as is administratively feasible after
the end of each Limitation Year, the Maximum Permissible Amount
for the Limitation Year will be determined on the basis of
Participants' actual Compensation for the Limitation Year.
(c) If the allocation of forfeitures or the use by the
Employer of the estimation described in Section 5.01(b)(i) above
results in an Excess Amount, such Excess Amount shall be
eliminated pursuant to the following procedure:
(i) The portion of the Excess Amount consisting
of Nondeductible Voluntary Contributions which are a part of the
Annual Addition shall be returned to the Participant (with any
income or gains attributable thereto) as soon as administratively
feasible;
(ii) At the election of the Administrator, if
after the application of Subparagraph (i) an Excess Amount still
exists, the portion of the Excess Amount consisting of Salary
Reduction Contributions and Deferred Cash Contributions (with any
income or gains attributable thereto) shall be returned to the
Participant;
(iii) If after the application of subparagraph
(ii) an Excess Amount still exists and the Participant is covered
by the Plan at the end of a Limitation Year, the Excess Amount in
the Participant's Account will be used to reduce Employer
Contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(iv) If after the application of subparagraph
(iii) an Excess Amount still exists and the Participant is not
covered by the Plan at the end of a Limitation Year, the Excess
Amount will be held unallocated in a suspense account. The
suspense account will be applied to reduce proportionately future
Employer Contributions (including any allocation of forfeitures)
for all remaining Participants in the next Limitation Year, and
each succeeding Limitation Year, if necessary. If a suspense
account is in existence at any time during a Limitation Year
pursuant to this subparagraph, it will not participate in the
allocation of the Trust's investment gains and losses. In the
event of termination of the Plan, the suspense account shall
revert to the Employer to the extent it may not then be allocated
to any Participant's Account.
(v) If a suspense account is in existence at any
time during a particular Limitation Year, all amounts in the
suspense account must be allocated and reallocated to
Participants' Accounts before any Employer Contributions or
Nondeductible Voluntary Contribution may be made to the Plan for
that Limitation Year.
(d) Notwithstanding any other provision in subsections
(a) through (c), the Employer shall not contribute any amount
that would cause an allocation to the suspense account as of the
date the contribution is allocated.
5.02 Employers Maintaining Other Master or Prototype Defined
Contribution Plans.
(a) This Section applies if, in addition to this Plan,
a Participant is covered under another qualified Master or
Prototype defined contribution plan, a welfare benefit fund (as
defined in Code Section 419(e)), an individual medical account
(as defined in Code Section 415(1)(2)), or a simplified employee
pension (as defined in Code Section 408(k)) maintained by the
Employer during any Limitation Year. The Annual Addition which
may be allocated to any Participant's Account for any such
Limitation Year shall not exceed the Maximum Permissible Amount,
reduced by the sum of any portion of the Annual Addition credited
to the Participant's account under such other plans, welfare
benefit funds, and individual medical accounts for the same
Limitation Year.
(b) If the Annual Addition with respect to a
Participant under other defined contribution plans, welfare
benefit funds, individual medical accounts and simplified
employee pensions maintained by the Employer of what would be
portions of the Annual Addition (if the allocations were made
under the Plan) are less than the Maximum Permissible Amount and
the Employer Contribution that would otherwise be contributed or
allocated to the Participant's Account under this Plan would
cause the Annual Addition for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced
so that the Annual Addition under all such plans and funds for
the Limitation Year will equal the Maximum Permissible Amount.
(c) If the Annual Addition with respect to the
Participant under such other defined contribution plans, welfare
benefit funds, individual medical accounts and simplified
employee pensions in the aggregate are equal to or greater than
the Maximum Permissible Amount, no amount will be contributed or
allocated to the Participant's Account under this Plan for the
Limitation Year.
(d) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine
the Maximum Permissible Amount for a Participant in the manner
described in Section 5.01(b)(i) provided the Employer complies
with the provisions of Section 5.01(b)(ii).
(e) If, pursuant to Section 5.02(d) or as a result of
the allocation of forfeitures, a Participant's Annual Addition
under this Plan and such Participant's annual additions under
such other defined contributions plans, welfare benefit funds,
individual medical accounts and simplified employee pensions
would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the annual additions
last allocated, except that annual additions attributable to a
simplified employee pension will be deemed to have been allocated
first, followed by annual additions to a welfare benefit fund or
individual medical account, regardless of the actual allocation
date.
(f) If an Excess Amount was allocated to a Participant
under this Plan on a date which coincides with the date an
allocation was made under another plan, the Excess Amount
attributed to this Plan will be the product of:
(i) the total Excess Amount allocated as of such
date, multiplied by
(ii) the quotient obtained by dividing
(A) the portion of the Annual Addition
allocated to the Participant for the Limitation Year as of such
date by
(B) the total Annual Addition allocated to
the Participant for the Limitation Year as of such date under
this and all the other qualified Master or Prototype defined
contribution plans maintained by the Employer.
(g) Any Excess Amount attributed to the Plan will be
disposed in the manner described in Section 5.01.
5.03 Employers Maintaining Other Defined Contribution Plans.
If a Participant is covered under another qualified defined
contribution plan which is not a Master or Prototype plan, the
Annual Addition credited to the Participant's Account under this
Plan for any Limitation Year will be limited in accordance with
the provisions of Section 5.02 above as though the plan were a
Master or Prototype Plan, unless the Employer provides other
limitations pursuant to the Adoption Agreement.
5.04 Employers Maintaining Defined Benefit Plans. If the
Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the
sum of the Participant's Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction will not exceed l.0 in any
Limitation Year. The Annual Addition which may be credited to
the Participant's Account under this Plan for any Limitation Year
will be limited in accordance with the provisions of Section 5.02
above, unless the Employer provides other limitations pursuant to
the Adoption Agreement.
5.05 Definitions. For purposes of this Article, the
following terms shall be defined as follows:
(a) Annual Addition. With respect to any Participant,
the "Annual Addition" shall be the sum of the following amounts
credited to a Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) forfeitures; and
(iii) Nondeductible Voluntary Contributions.
For the purposes of calculating the amount of Employer
Contributions credited to a Participant's Account, Excess
Elective Deferrals distributed on or before the April 15 deadline
described in Section 6.01(b) below shall not be considered to be
amounts credited to the Participant's Account but Excess
Contributions distributed to the Participant pursuant to Section
6.02 below, and Excess Aggregate Contributions distributed to, or
forfeited by, the Participant pursuant to Section 6.03, 6.04 or
6.05 below shall be considered to be amounts credited to a
Participant's Account.
Any Excess Amount applied under Section 5.01(c)(iii) or (iv)
or Section 5.02(e) hereof in a Limitation Year to reduce Employer
Contributions will be considered part of the Annual Addition for
such Limitation Year. Amounts allocated, after March 31, 1984,
to an individual medical account (as defined in Code Section
415(1)(2)) which is part of a pension or an annuity plan
maintained by the Employer, or to a simplified employee pension
(as defined in Code Section 408(k)) maintained by the Employer,
are treated as part of the Annual Addition. Also, amounts
derived from contributions paid or accrued after December 31,
1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the
separate account of a Key Employee (as defined in Section
23.02(a) hereof) under a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Employer, are treated as part
of the Annual Addition but only for the purpose of determining
whether the dollar limitation portion of the definition of
Maximum Permissible Amount has been exceeded.
(b) Compensation. For the purposes of this Article V,
the term "Compensation" shall mean one of the following as
selected by the Employer in the Adoption Agreement:
(i) W-2 Compensation. Information required to be
reported under Sections 6041, 6051 and 6052 of the Code (Wages,
tips and other compensation as reported on Form W-2).
Compensation is defined as wages within the meaning of Section
3401(a) and all other payments of compensation to an Employee by
the Employer (in the course of the Employer s trade or business)
for which the Employer is required to furnish the Employee a
written statement under Sections 6041(d), 6051(a)(3) and 6052.
Compensation must be determined without regard to any rules under
Section 3401(a) that limit the remuneration included in wages
based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in
Section 3401(a)(2)).
(ii) 415 Safe Harbor Compensation. Wages,
salaries, and fees for professional services and other amounts
received for personal services actually rendered in the course of
employment with the Employer maintaining the Plan (including, but
not limited to commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on
insurance premiums, tips and bonuses), and excluding the
following:
(A) Employer contributions to a plan of
deferred compensation which are not includible in the
Participant's gross income for the taxable year in which
contributed, or Employer contributions under a simplified
employee pension plan, or any distributions from a plan of
deferred compensation;
(B) Amounts realized from the exercise of a
non-qualified stock option, or when property transferred to the
Participant in connection with the performance of services either
becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(C) Amounts realized from the sale, exchange
or other disposition of stock acquired under an incentive stock
option; and
(D) Other amounts which received special tax
benefits, or contributions made by the Employer (whether or not
under a salary reduction agreement) towards the purchase of an
annuity described in Code Section 403(b) (whether or not the
amounts are actually excludable from the gross income of the
Participant).
(iii) Safe Harbor Alternative Definition.
Compensation as defined in (ii) above, reduced by all of the
following items (even if includible in gross income):
reimbursements or other expenses allowances, fringe benefits
(cash and non-cash) moving expenses, deferred compensation and
welfare benefits.
For any Self-Employed Individual, Compensation shall mean
Earned Income.
For purposes of applying the limitations of this Article V,
Compensation for a Limitation Year is the Compensation actually
paid or made available in gross income during such year.
Notwithstanding the preceding sentence, Compensation for a
Participant in a defined contribution plan who is permanently and
totally disabled (as defined in Code Section 22(e)(3)) is the
Compensation such Participant would have received for the
Limitation Year if the Participant was paid at the rate of
Compensation paid immediately before becoming permanently and
totally disabled; such imputed compensation for the disabled
Participant may be taken into account only if the Participant is
not a Highly Compensated Employee, and contributions made on
behalf of such a Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. The "Defined Benefit
Fraction" shall be a fraction, the numerator of which is the sum
of the Participant's Projected Annual Benefits under all the
defined benefit plans (whether or not terminated) maintained by
the Employer, and the denominator of which is the lesser of 125%
of the dollar limitation in effect for the Limitation Year under
Code Section 415(b)(l)(A) or 140% of the Participant's Highest
Average Compensation (including any adjustments required by Code
Section 415(b)).
Notwithstanding the above, if the Participant was a
participant as of the first day of the first Limitation Year
beginning after December 31, 1986 in one or more defined benefit
plans maintained by the Employer which were in existence on
May 6, 1986, the denominator of this fraction will not be less
than 125% of the sum of the annual benefits under such plans
which the Participant had accrued as of the end of the last
Limitation Year beginning before January 1, 1987 (disregarding
any changes in the terms and conditions of the Plan after May 5,
1986). The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all Limitation Years
beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation. The
"Defined Contribution Dollar Limitation" shall be the greater of:
(i) $30,000; or (ii) one-fourth (1/4) of the defined benefit
dollar limitation set forth in Code Section 415(b)(i) as in
effect for the Limitation Year.
(e) Defined Contribution Fraction. The "Defined
Contribution Fraction" shall be a fraction, the numerator of
which is the sum of the Annual Additions to the Participant's
account under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and all
prior Limitation Years (including the Annual Additions
attributable to the Participant's nondeductible employee
contributions to all defined benefit plans, whether or not
terminated, maintained by the Employer, and the Annual Additions
attributable to all welfare benefit funds (as defined in Code
Section 419(e)), individual medical accounts (as defined in Code
Section 415(1)(2)) and simplified employee pensions (as defined
in Code Section 408(k)), and the denominator of which is the sum
of the Maximum Aggregate Amounts for the current and all prior
Limitation Years of service with the Employer (regardless of
whether a defined contribution plan was maintained by the
Employer). The Maximum Aggregate Amount in any Limitation Year
is the lesser of 125% of the dollar limitation in effect under
Code Section 415(c)(l)(A) or 35% of the Participant's
Compensation for such year.
If the Participant was a participant as of the end of the
first day of the first Limitation Year beginning after
December 31, 1986 in one or more defined contribution plans
maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum
of this Defined Contribution Fraction and the Defined Benefit
Fraction would otherwise exceed l.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of:
(i) the excess of the sum of the fractions over
l.0, multiplied by
(ii) the denominator of this Defined Contribution
Fraction, will be permanently subtracted from the numerator of
this fraction. The adjustment is calculated using the fractions
as they would be computed as of the end of the last Limitation
Year beginning before January 1, 1987 (disregarding any changes
in the terms and conditions of the Plan made after May 5, 1986
but using the Code Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987). This
adjustment also will be made if at the end of the last Limitation
Year beginning before January 1, 1984, the sum of the fractions
exceeds 1.0 because of accruals or additions that were made
before the limitations of this Section 5 became effective to any
plans of the Employer in existence on July 1, 1982. For purposes
of this paragraph, a Master or Prototype plan with an opinion
letter issued before January 1, 1983, which was adopted by the
Employer on or before September 30, 1983, is treated as a plan in
existence on July 1, 1982.
(f) Employer. "Employer" means the Employer that
adopts this Plan and all members of (i) a controlled group of
corporations (as defined in Code Section 414(b) as modified by
Code Section 415(h)), (ii) commonly controlled trades or
businesses (whether or not incorporated) (as defined in Code
Section 414(c) as modified by Code Section 415(h)), or
(iii) affiliated service groups (as defined in Code Section
414(m)) of which the Employer is a part and (iv) any other entity
required to be aggregated with the employer pursuant to Code
Section 414(o) and the regulations thereunder.
(g) Excess Amount. The "Excess Amount" is the excess
of what would otherwise be a Participant's Annual Addition for
the Limitation Year over the Maximum Permissible Amount. If at
the end of a Limitation Year when the Maximum Permissible Amount
is determined on the basis of the Participant's actual
Compensation for the year, an Excess Amount results, the Excess
Amount will be deemed to consist of the portion of the Annual
Addition last allocated, except that the portion of the Annual
Addition attributable to a welfare benefit fund will be deemed to
have been allocated first regardless of the actual allocation
date.
(h) Highest Average Compensation. A Participant's
"Highest Average Compensation" is his or her average Compensation
for the three consecutive Years of Service with the Employer that
produces the highest average.
(i) Limitation Year. A "Limitation Year" is the Plan
Year or any other 12-consecutive-month period specified by the
Employer in the Adoption Agreement. All qualified plans
maintained by the Employer must use the same Limitation Year. If
the Limitation Year is amended to a different
12-consecutive-month period, the new Limitation Year must begin
on a date within the Limitation Year in which the amendment is
made.
(j) Master or Prototype Plan. A "Master or Prototype"
plan is a plan the form of which is the subject of a favorable
opinion letter from the Internal Revenue Service.
(k) Maximum Permissible Amount. For a Limitation
Year, the "Maximum Permissible Amount" with respect to any
Participant shall be the lesser of
(i) the Defined Contribution Dollar Limitation or
(ii) 25% of the Participant's Compensation for the
Limitation Year.
The compensation limitation referred to in (ii) above shall
not apply to contribution for medical benefits (within the
meaning of Code Section 401(h) or Section 419A(f)(2)) which is
otherwise treated as an Annual Addition under Code Section
415(l)(1) or 419A(d)(2).
(l) Projected Annual Benefit. The "Projected Annual
Benefit" is the annual retirement benefit (adjusted to an
actuarial equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant
would be entitled under the terms of the plan assuming:
(i) the Participant will continue employment
until normal retirement date under the plan (or current age, if
later), and
(ii) the Participant's compensation for the
current Limitation Year and all other relevant factors used to
determine benefits under the plan will remain constant for all
future Limitation Years.
ARTICLE VI. LIMITATIONS ON DEFERRALS,
MATCHING ALLOCATIONS AND VOLUNTARY CONTRIBUTIONS.
6.01 Maximum Amount of Elective Deferrals. For each
calendar year, the sum of (i) the Salary Reduction Contributions,
(ii) Deferred Cash Contributions (together "Elective Deferrals")
made on behalf of any Participant under this Plan, and
(iii) similar contributions made under all other plans of the
Employer with a cash or deferred feature shall not exceed the
dollar limitation contained in Code Section 402(g) in effect at
the beginning of such calendar year. Elective Deferrals shall
not include amounts properly distributed to a Participant as an
Excess Amount pursuant to Section 6.01(b). If, during any
calendar year, more than the maximum permissible amount under
Code Section 402(g) is allocated pursuant to one or more cash or
deferred arrangements to a Participant's accounts under the Plan
and any other plan described in Code Sections 401(k), 408(k),
403(b), 457, or 501(c)(18), the following provisions shall apply:
(a) The Participant may, but is not required to,
assign to this Plan all or part of such contributions in excess
of the maximum permissible amount (hereinafter "Excess Elective
Deferrals") by notifying the Administrator by March 1 of the
calendar year next succeeding the calendar year in which such
contributions are made. To be effective, such notice must be in
writing, state that Excess Elective Deferrals have been made on
behalf of such Participant for the preceding calendar year, and
be submitted to the Administrator. A Participant is deemed to
notify the Administrator of any Excess Elective Deferrals that
arise by taking into account only those Excess Elective Deferrals
made to this Plan and any other plans of this Employer.
(b) To the extent a Participant timely assigns, or is
deemed to assign, Excess Elective Deferrals to the Plan pursuant
to (a) above, the Administrator shall direct the Trustee to
distribute such Excess Elective Deferrals, adjusted for income or
loss allocable thereto pursuant to Section 6.01(c) below, to the
Participant no later than the April 15 of the calendar year next
succeeding the calendar year in which such Excess Elective
Deferrals were made.
(c) Excess Elective Deferrals shall be adjusted for
any income or loss up to the last day of the calendar year in
which such Excess Elective Deferrals were made. The income or
loss allocable to Excess Elective Deferrals is (i) the income or
loss allocable to the Participant's Salary Reduction Contribution
Account and/or Deferred Cash Contribution Account, as the case
may be, for the taxable calendar year multiplied by a fraction,
the numerator of which is such Participant's Excess Elective
Deferrals for the year and the denominator is the balance of such
account or accounts, as the case may be, determined as the
beginning of the calendar year plus any Salary Reduction
Contributions or Deferred Cash Contributions made during the
calendar year without regard to any income or loss occurring
during such calendar year or (ii) such other amount determined
under any reasonable method, provided that such method is used
consistently for all Participants in calculating the
distributions required under this Article VI for the Plan Year,
and is used by the Plan to allocate income or loss to
Participants' Accounts. Income or loss allocable to the period
between the end of the calendar year and the date of distribution
shall be disregarded in determining income or loss. Excess
Elective Deferrals shall be treated as an Annual Addition under
the Plan, unless such amounts are distributed no later than the
first April 15 following the close of the calendar year.
6.02 Limitation on Elective Deferrals.
(a) For each Plan Year, the Average Deferral
Percentage of the group of Highly Compensated Participants for
the Plan Year may not exceed the greater of (i) 1.25 times the
Average Deferral Percentage of the group of Non-Highly
Compensated Participants for the same Plan Year; or (ii) the
lesser of 2 times the Average Deferral Percentage of all such
Non-Highly Compensated Participants, or such Average Deferral
Percentage plus 2 percentage points.
For purposes of this Section 6.02, the "Average Deferral
Percentage" of a specified group of Participants for a Plan Year
shall be the average of the ratios (calculated separately for
each Participant in such group) of (A) the amount of the
Contributions actually paid over to the Trust on behalf of each
Participant for each Plan Year to (B) the Participant's
Compensation for the Plan Year. For purposes of this Section
6.02, "Compensation" shall have the same meaning as in Section
2.09(a); provided, however, that to the extent elected by the
Employer in the Adoption Agreement "Compensation" shall exclude
amounts paid for the period when the Participant was not eligible
to make Elective Deferrals and/or shall include the amounts set
forth in Section 2.09(b). For purposes of this Section 6.02,
"Contributions" shall include both Elective Deferrals (including
Excess Elective Deferrals of Highly Compensated Participants) and
Qualified Nonelective Contributions, if any. Such Contributions
shall not include (1) Excess Elective Deferrals of Non-Highly
Compensated Participants that arise solely from Elective
Deferrals made under this Plan or other plans of the Employer,
and (2) Elective Deferrals that are taken into account in the
Contribution Percentage Test (provided the Average Deferral
Percentage test is satisfied both with and without exclusion of
these Elective Deferrals). For purposes of computing Average
Deferral Percentages, each Employee who would be a Participant
but for the failure to make Elective Deferrals shall be treated
as a Participant on whose behalf no Elective Deferrals are made.
(b) Special Rules:
(i) The deferral percentage of a Highly
Compensated Participant for the Plan Year who is eligible to have
Elective Deferrals allocated to his or her accounts under two or
more arrangements described in Code Section 401(k), that are
maintained by the Employer, shall be determined as if such
Elective Deferrals were made under a single arrangement. If a
Highly Compensated Participant participates in two or more cash
or deferred arrangements that have different Plan Years, all cash
or deferred arrangements ending with or within the same calendar
year shall be treated as a single arrangement. Notwithstanding
the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under regulations promulgated under
Code Section 401(k).
(ii) In the event that this Plan satisfies the
requirements of Code Section 401(k), 401(a)(4), or 410(b) only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such Code sections only if
aggregated with this Plan, then this Section 6.02 shall be
applied by determining the Average Deferral Percentages of
Employees as if all such plans were a single plan. For Plan
Years beginning after December 31, 1989, plans may be aggregated
in order to satisfy Code Section 401(k) only if they have the
same Plan Year.
(iii) For purposes of determining the deferral
percentage of a Participant who is a 5% owner or one of the top
ten Highly Compensated Employees, the Elective Deferrals (and, if
applicable, Qualified Nonelective Contributions) and Compensation
of such Participant shall include the Elective Deferrals (and, if
applicable, Qualified Nonelective Contributions) and Compensation
for the Plan Year of his Family Members. Such Family Members
shall be disregarded as separate Participants in determining the
Average Deferral Percentage both for Non-Highly Compensated
Participants and for Highly Compensated Participants.
(iv) For purposes of applying the Average Deferral
Percentage test, Elective Deferrals and Qualified Nonelective
Contributions must be made before the last day of the 12-month
period immediately following the Plan Year to which contributions
relate.
(v) The Employer shall maintain records
sufficient to demonstrate satisfaction of the Average Deferral
Percentage test and the amount of Qualified Nonelective
Contributions, if any, used in such test.
(vi) The determination and treatment of the
deferral percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(vii) If, in any Plan Year, the Plan benefits
Employees otherwise excludable from the Plan if the Plan had
imposed the greatest minimum age and service conditions
permissible under Section 410(a) of the Code, and the Employer
applies Section 410(b) of the Code separately to the portion of
the Plan that benefits only Employees who satisfy age and service
conditions under the Plan that are lower than the greatest
minimum age and service conditions permissible under Section
410(a) and to the portion of the Plan that benefits Employees who
have satisfied the greatest minimum age and service conditions
permissible under Section 410(a), the Plan shall be treated as
comprising two separate Plans and the Average Deferral Percentage
test set forth in subsection (a) shall be applied separately for
each group of Employees in each Plan.
(c) If, for any Plan Year, the Plan is unable to
satisfy the Average Deferral Percentage test set forth in
subsection (a) above, the Employer may make a Qualified
Nonelective Contribution to the Trust in an amount determined at
the discretion of the Employer on behalf of the group of Non-
Highly Compensated Participants who were actively employed on the
last day of the Plan Year and who were eligible to participate in
the Plan for the entire Plan Year. The Qualified Nonelective
Contribution will be allocated as follows:
(i) The lowest paid Participant in the group will
be allocated an amount equal to the lowest of (1) 25% of the
Participant s Compensation for the Plan Year; (2) the Maximum
Permissible Amount applicable to the Participant; or (3) the full
amount of the Qualified Nonelective Contribution.
(ii) The next lowest paid Participant will be
allocated an amount equal to the lowest of (1) 25% of the
Participant s Compensation for the Plan Year; (2) the Maximum
Permissible Amount applicable to the Participant; or (3) the
balance of the Qualified Nonelective Contribution after the above
allocation.
(iii) The allocation in step (ii) will be
applied individually to each remaining Participant in the group,
in ascending order of Compensation, until the Qualified
Nonelective Contribution is fully allocated. Once the Qualified
Nonelective Contribution is fully allocated, no further
allocation will be made to the remaining Participants in the
group.
(d) If, for any Plan Year, after taking into account
the Qualified Nonelective Contributions made by the Employer
pursuant to Subsection (c) above, if any, the Administrator shall
determine the aggregate amount of Elective Deferrals of Highly
Compensated Participants for such Plan Year exceeds the maximum
amount of such contributions permitted by the Average Deferral
Percentage test set forth in subsection (a) above, the
Administrator shall reduce such excess contributions made on
behalf of Highly Compensated Participants in order of their
deferral percentages, beginning with the highest of such
percentages (hereinafter "Excess Contributions"). For each
Highly Compensated Participant who is so affected, the
Administrator shall reduce amounts credited to his or her Salary
Reduction Contribution Account and Deferred Cash Contribution
Account in proportion to the Participant's Salary Reduction
Contributions and Deferred Cash Contributions for the Plan Year.
Excess Contributions of each Participant who is subjected to the
Family Member aggregation rules shall be allocated among the
Family Members of such Participant in proportion to the Elective
Deferrals (and amounts treated as Elective Deferrals) of each
Family Member that is combined to determine the combined deferral
percentage. Such Excess Contributions, plus any income and minus
any loss allocable thereto, shall be distributed to each affected
Highly Compensated Participant no later than the last day of the
Plan Year following the Plan Year in which such Excess
Contributions were made. If Excess Contributions are not
distributed before the date which is 2-1/2 months after the last
day of the Plan Year in which such Excess Contributions arose, a
10% excise tax shall be imposed on the Employer maintaining the
Plan with respect to such amounts. Excess Contributions shall be
treated as an Annual Addition under the Plan.
(e) Excess Contributions shall be adjusted for any
income or loss up to and including the last day of the Plan Year
for which such Excess Contributions were made. The income or
loss allocable to Excess Contributions is (i) the income or loss
allocable to the Participant's Salary Reduction Contribution
Account and/or Deferred Cash Contribution Account, as the case
may be, for the Plan Year multiplied by a fraction, the numerator
of which is such Participant's Excess Contributions for the year
and the denominator is the balance of such Account or Accounts,
as the case may be, determined as of the beginning of the Plan
Year plus any Salary Reduction Contributions and/or Deferred Cash
Contributions made during the Plan Year without regard to any
income or loss occurring during such Plan Year, or (ii) such
other amount determined under any reasonable method, provided
that such method is used consistently for all Participants in
calculating any distributions required under this Article VI for
the Plan Year and is used by the Plan in allocating income or
loss to Participants' Accounts. Income or loss allocable to the
period between the end of the Plan Year and the date of
distribution shall be disregarded.
6.03 Limitation on Voluntary Nondeductible Contributions and
Employer Matching Contributions.
(a) For each Plan Year, the Average Contribution
Percentage of the group of Highly Compensated Participants for
the Plan Year may not exceed the greater of (i) 1.25 times the
Average Contribution Percentage of the group of Non-Highly
Compensated Participants for the same Plan Year, or (ii) the
lesser of 2 times the Average Contribution Percentage of all such
Non-Highly Compensated Participants, or such Average Contribution
Percentage plus 2 percentage points.
For purposes of this Section 6.03, the "Average Contribution
Percentage" of a specified group of Participants for a Plan year
shall be the average of the ratios (expressed as a percentage and
calculated separately for each Participant in such group) of
(A) the Contribution Percentage Amounts actually paid over to the
Trust on behalf of each Participant to (B) the Participant's
Compensation for the Plan Year. For purposes of this Section
6.03, "Compensation" shall have the same meaning as in Section
2.09; provided, however, that to the extent elected by the
Employer in the Adoption Agreement, "Compensation" shall exclude
amounts paid for the period when the Participant was not eligible
to participate in the Plan with respect to the allocation of
Employer Matching Contributions or with respect to the making of
Voluntary Nondeductible Contributions and/or shall include the
amounts set forth in Section 2.09(b). For purposes of this
Section 6.03, "Contribution Percentage Amounts" shall be the sum
of Voluntary Nondeductible Contributions and Employer Matching
Contributions. Such Contribution Percentage Amounts shall not
include Employer Matching Contributions that are forfeited either
to correct Excess Aggregate Contributions or because the
contributions to which they related are Excess Deferrals, Excess
Contributions, or Excess Aggregate Contributions. In determining
the Contribution Percentage Amounts, the Administrator may
include Qualified Nonelective Contributions that are not used in
satisfying the Average Deferral Percentage test of Section 6.02
and Qualified Matching Contributions. The Administrator also may
elect to use Elective Deferrals in the Contribution Percentage
Amounts so long as the Average Deferral Percentage test is met
before the Elective Deferrals are used in the Average
Contribution Percentage test and continues to be met following
the exclusion of those Elective Deferrals that are used to meet
the Average Contribution Percentage test. For purposes of
computing Average Contribution Percentages, each Employee who is
eligible to make Voluntary Nondeductible Contributions or
Elective Deferrals or to receive an Employer Matching
Contribution shall be taken into account as a Participant,
whether or not he is actually making, or entitled to receive,
such contributions to the Trust.
(b) Special Rules:
(i) For purposes of this Section 6.03, the
contribution percentage of a Highly Compensated Participant for
the Plan Year who is eligible to have Contribution Percentage
Amounts allocated to his or her accounts under two or more plans
described in Code Section 401(a), or arrangements described in
Code Section 401(m) that are maintained by the Employer, shall be
determined as if the total of such Contribution Percentage
Amounts was made under each plan. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily
disaggregated under regulations under Code Section 401(m).
(ii) In the event that this Plan satisfies the
requirements of Code Section 401(m), 401(a)(4) or 410(b) only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the Code only
if aggregated with this Plan, then this Section 6.03 shall be
applied by determining the Contribution Percentage of
Participants as if all such plans were a single plan. For Plan
Years beginning after December 31, 1989, plans may be aggregated
in order to satisfy Code Section 401(m) only if they have the
same Plan Year.
(iii) For purposes of determining the
Contribution Percentage of a Participant who is a 5% owner or one
of the top-ten Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Participant shall
include the Contribution Percentage Amounts and Compensation for
the Plan Year of his Family Members. Such Family Members shall
be disregarded as separate Employees in determining the Average
Contribution Percentage both for Non-Highly Compensated
Participants and for Highly Compensated Participants.
(iv) For purposes of applying the Average
Contribution Percentage test, Voluntary Nondeductible
Contributions are considered to have been made in the Plan Year
in which contributed to the Trust. Employer Matching
Contributions, Elective Deferrals, Qualified Matching
Contributions and Qualified Nonelective Contributions will be
considered made for a Plan Year if made no later than the end of
the 12-month period immediately following the Plan Year to which
such Contributions relate.
(v) The Employer shall maintain records
sufficient to demonstrate satisfaction of the Average
Contribution Percentage test and the amount of Qualified Matching
Contributions and Qualified Nonelective Contributions, if any,
used in such test.
(vi) The determination and treatment of the
contribution percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of the
Treasury.
(vii) If, in any Plan Year, the Plan benefits
Employees otherwise excludable from the Plan if the Plan had
imposed the greatest minimum age and service conditions
permissible under Section 410(a) of the Code, and the Employer
applies Section 410(b) of the Code separately to the portion of
the Plan that benefits only Employees who satisfy age and service
conditions under the Plan that are lower than the greatest
minimum age and service conditions permissible under Section
410(a) and to the portion of the Plan that benefits Employees who
have satisfied the greatest minimum age and service conditions
permissible under Section 410(a), the Plan shall be treated as
comprising two separate Plans and the Average Contribution
Percentage test set forth in subsection (a) shall be applied
separately for each group of Employees in each Plan.
(c) If, for any Plan Year, the Plan is unable to
satisfy the Average Contribution Percentage test set forth in
subsection (a) above, in lieu of distributing excess Contribution
Percentage Amounts to Highly Compensated Participants as provided
in subsection (d) below, the Employer may make a Qualified
Matching Contribution to the Trust on behalf of Non-Highly
Compensated Participants in an amount sufficient to enable the
Plan to meet the Average Contribution Percentage test set forth
in subsection (a) above. Such Qualified Matching Contribution
shall be allocated to the Qualified Nonelective Contribution
Account of each Non-Highly Compensated Participant who is
eligible to participate in the Plan at any time during the Plan
Year in the same manner as the allocation of Employer Matching
Contributions.
(d) If, for any Plan Year, the Administrator shall
determine that the aggregate Contribution Percentage Amounts of
Highly Compensated Participants for such Plan Year exceeds the
maximum amount permitted by the Average Contribution Percentage
test in subsection (a) above, the Administrator shall reduce such
excess Contribution Percentage Amounts made on behalf of Highly
Compensated Participants in order of their contribution
percentages, beginning with the highest of such percentages
(hereinafter "Excess Aggregate Contributions"). The foregoing
determination shall be made after first determining Excess
Elective Deferrals pursuant to Section 6.01, and then determining
Excess Contributions pursuant to Section 6.02. For each Highly
Compensated Participant who is affected, the Administrator shall
reduce, on a pro rata basis, amounts credited to his or her
Voluntary Nondeductible Contribution Account and his or her
Employer Matching Contribution Account. Excess Aggregate
Contributions of each Highly Compensated Participant who is
subject to the Family Member aggregation rules shall be allocated
among the Family Members in proportion to the Voluntary
Nondeductible Contributions and Employer Matching Contributions
(and amounts treated as Contribution Percentage Amounts) of each
Family Member that is combined to determine the combined
contribution percentage. Subject to the provisions of
Section 6.05, Excess Aggregate Contributions which are
attributable to the sum of Voluntary Nondeductible Contributions
and fully vested Employer Matching Contributions plus any income
and minus any loss allocable thereto, shall be distributed to
each affected Highly Compensated Participant no later than the
last day of the Plan Year following the Plan Year in which such
Excess Aggregate Contributions were made. If such Excess
Aggregate Contributions are not distributed within 2-1/2 months
after the last day of the Plan Year in which such Excess
Aggregate Contributions arose, a 10% excise tax shall be imposed
on the Employer maintaining the Plan with respect to those
amounts. Excess Aggregate Contributions which are attributable
to Employer Matching Contributions which are not fully vested,
plus any income and minus any loss allocable thereto, shall be
forfeited and shall be applied to reduce future Employer Matching
Contributions. Excess Aggregate Contributions shall be treated
as an Annual Addition under the Plan.
(e) Excess Aggregate Contributions shall be adjusted
for any income or loss up to and including the last day of the
Plan Year for which such Excess Aggregate Contributions were
made. The income or loss allocable to Excess Aggregate
Contributions is (i) the income or loss allocable to the
Participant's Voluntary Nondeductible Contribution Account and/or
Employer Matching Contribution Account, as the case may be, for
the Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Aggregate Contributions for the year
and the denominator is the balance of such Account or Accounts,
as the case may be, determined as of the beginning of the Plan
Year plus any Voluntary Nondeductible Contributions and/or
Employer Matching Contributions made during the Plan without
regard to any income or loss occurring during such Plan Year, or
(ii) such other amount determined under any reasonable method,
provided that such method is used consistently for all
Participants in calculating any distributions required under this
Article VI for the Plan Year and is used by the Plan in
allocating income or loss to Participants' Accounts. Income or
loss allocable to the period between the end of the Plan Year and
the date of distribution shall be disregarded.
6.04 Multiple Use Test. If one or more Highly Compensated
Participants participate in both a cash or deferred arrangement
and a plan subject to the Average Contribution Percentage test
maintained by the Employer and the sum of the Average Deferral
Percentage and Average Contribution Percentage of those Highly
Compensated Participants subject to either or both tests exceeds
the Aggregate Limit, then unless the Employer elects to make a
Qualified Nonelective Contribution or a Qualified Matching
Contribution to the Trust to the extent necessary to enable the
Plan to satisfy the Aggregate Limit, the Contribution Percentage
Amounts of those Highly Compensated Participants who also
participate in a cash or deferred arrangement will be reduced
(beginning with such Highly Compensated Participant whose
contribution percentage is the highest) so that the Aggregate
Limit is not exceeded. The amount by which each Highly
Compensated Participant's Contribution Percentage Amount is
reduced shall be treated as an Excess Aggregate Contribution.
The Average Deferral Percentage and Average Contribution
Percentage of the Highly Compensated Participants are determined
after any corrections required to meet the Average Deferral
Percentage and Average Contribution Percentage tests in Sections
6.02 and 6.03. Multiple use does not occur if both the Average
Deferral Percentage and Average Contribution Percentage of the
Highly Compensated Employees do not exceed 1.25 multiplied by the
Average Deferral Percentage and Average Contribution Percentage
of the Non-Highly Compensated Employees.
For purposes of this Section 6.04, the "Aggregate Limit"
shall mean the sum of (i) 125 percent of the greater of the
Average Deferral Percentage of the Non-Highly Compensated
Participants for the Plan Year or the Average Contribution
Percentage of the Non-Highly Compensated Participants under the
Plan subject to Code Section 401(m) for the Plan Year beginning
with or within the Plan Year of the cash or deferred arrangement
and (ii) the lesser of 200% of, or two percentage points plus the
lesser of such Average Deferral Percentage or Average
Contribution Percentage. "Lesser" shall be substituted for
"greater" in (i) and "greater" shall be substituted for "lesser"
after "two percentage points plus the" in (ii) if such
substitution would result in a larger Aggregate Limit.
6.05 Further Limitations on Employer Matching Contributions.
Notwithstanding anything to the contrary in the foregoing, any
Employer Matching Contributions related to a Participant's Excess
Deferrals, Excess Contributions and/or Excess Aggregate
Contributions shall be forfeited by such Participant and such
amounts shall be applied to reduce future Employer Matching
Contributions.
6.06 Special Rules. Any amount distributed to a Highly
Compensated Participant pursuant to this Article VI shall not be
subject to any of the consent rules for Participants and sponsors
contained in Articles IX, X and XXIV, below. Amounts distributed
pursuant to this Article VI shall be allocated on a pro rata
basis among the Designated Investments in which a Participant's
Account is invested; provided, however, that the Administrator or
the Participant may specify an alternative manner in which
distributions shall be allocated.
ARTICLE VII. TIME AND MANNER OF MAKING CONTRIBUTIONS
7.01 Manner. Unless otherwise agreed to by the Trustee,
contributions to said Trustee shall be made only in cash. All
contributions may be made in one or more installments.
7.02 Time. Employer Contributions (other than Salary
Reduction Contributions and Deferred Cash Contributions) with
respect to a Plan Year shall be made before the time limit,
including extensions thereof, for filing the Employer's federal
income tax return for the Year with or within which the
particular Plan Year ends (or such later time as is permitted by
regulations authorized by the Secretary of the Treasury or
delegate or such earlier time as the Secretary of the Treasury or
delegate prescribes with respect to contributions used to satisfy
the nondiscrimination tests set forth in Article VI above).
Unless the Secretary of the Treasury prescribes a later date in
regulations, Salary Reduction and Deferred Cash Contributions
shall be made within 30 days after the date on which, in the
absence of the Participant's election to make such contributions,
such amounts would have been payable to the Participant as cash
compensation. Nondeductible Voluntary Contributions for a given
Limitation Year (as defined in Section 5.05(i) above) must be
made during such Limitation Year or within 30 days of the end of
the Limitation Year. Rollover Contributions may be made at any
time acceptable to the Administrator in accordance with
Section 4.06 hereof.
All contributions shall be paid to the Administrator for
transfer to the Trustee, as soon as possible, or, if acceptable
to the Administrator and the Trustee, such contributions may be
paid directly to the Trustee. The Administrator shall transfer
such contributions to the Trustee as soon as possible. The
Administrator may establish a payroll deduction system or other
procedure to assist the making of Nondeductible Voluntary
Contributions to the Trust, and the Administrator may from time
to time adopt rules or policies governing the manner in which
such contributions may be made so that the Plan may be
conveniently administered.
7.03 Separate Accounts. For each Participant, a separate
account shall be maintained for each of the following types of
contributions and the income, expenses, gains and losses
attributable thereto:
(a) Salary Reduction Contributions, if selected in the
Adoption Agreement;
(b) Deferred Cash Contributions, if selected in the
Adoption Agreement;
(c) Employer Profit Sharing Contributions, if selected
in the Adoption Agreement;
(d) Employer Matching Contributions, if selected in
the Adoption Agreement;
(e) Nondeductible Voluntary Contributions, if selected
in the Adoption Agreement, with separate accounts maintained for
pre-1987 Nondeductible Voluntary Contributions and post-1986
Nondeductible Voluntary Contributions;
(f) Qualified Nonelective Contributions and Qualified
Matching Contributions, if selected in the Adoption Agreement;
(g) Deductible Voluntary Contributions, if
Participants made such contributions in past years; and
(h) Rollover Contributions, if, pursuant to Section
4.06 hereof, the Administrator directs the Trustee to accept such
contributions.
In addition, pursuant to Section 8.03 hereof, separate
accounts will be maintained for the pre-break and post-break
Employer Contributions made on behalf of a Participant who has
Service excluded from the calculations of Vesting Years.
Notwithstanding the above, if a Participant's rights to one or
more types of Employer Contributions are immediately and fully
nonforfeitable and are subject to the same distribution rules,
such types of contributions may be maintained in a single
account.
ARTICLE VIII. VESTING
8.01 When Vested. A Participant shall always have a fully
vested and nonforfeitable interest in his or her Nondeductible
Voluntary Contribution Account, Deductible Voluntary Contribution
Account, Salary Reduction Contribution Account, Deferred Cash
Contribution Account, Qualified Nonelective Contribution Account
and Rollover Account. A Participant's interest in his or her
Employer Profit Sharing Contribution Account and Employer
Matching Contribution Account shall be vested and nonforfeitable
at Normal Retirement Date, death while in Service, Disability,
upon termination (including a complete discontinuance of Employer
Contributions) or partial termination of the Plan and otherwise
only to the extent specified in the Adoption Agreement.
8.02 Employer Profit Sharing Contribution and Employer
Matching Contribution Forfeitures. If a Participant's employment
with the Employer is terminated before his or her Employer Profit
Sharing Contribution Account and/or Employer Matching
Contribution Account is (are) fully vested in accordance with
Section 8.01, this Section 8.02 shall apply.
(a) The portion of the Participant's Employer Profit
Sharing Contribution Account and/or Employer Matching
Contribution Account which is to be forfeited pursuant to
subsection (b) below shall be treated as follows:
(i) if the Employer has not specified otherwise
in the Adoption Agreement, the forfeiture shall be allocated as
if it were an Employer Profit Sharing Contribution or Employer
Matching Contribution, as the case may be, for the Plan Year
following the Plan Year in which such forfeiture occurs, or
(ii) if the Employer so specifies in the Adoption
Agreement, the forfeiture(s) shall be applied to reduce the
Employer's obligation to make Employer Matching Contributions for
the Plan Year following the Plan Year in which the forfeiture
occurs, provided that if the amount of the forfeiture to be
reallocated exceeds the Employer's then unsatisfied obligation to
make Employer Matching Contributions for the Plan Year, the
forfeiture shall be applied to reduce the Employer's obligation
to make fixed Employer Profit Sharing Contributions for the Plan
Year following the Plan Year in which the forfeiture occurs. If
the Plan does not provide for fixed Employer Profit Sharing
Contributions, or the amount of forfeiture to be reallocated
exceeds the Employer's then unsatisfied obligation to make fixed
Employer Profit Sharing Contributions, the forfeiture shall be
reallocated as if it were an additional discretionary Employer
Profit Sharing Contribution made for the Plan Year following the
Plan Year in which the forfeiture occurs.
(b) If the Participant elects to receive a
distribution of the value of his vested account balances in his
or her Employer Profit Sharing Contribution and Employer Matching
Contribution Accounts in a lump sum pursuant to the provisions of
Section 10.02(a)(ii) or receives a nonconsensual distribution
pursuant to Section 10.04, the nonvested portion of his or her
Employer Profit Sharing Contribution and Employer Matching
Contribution Accounts shall be treated as a forfeiture and
reallocated pursuant to the provisions of Section 8.02(a). For
this purpose, if the value of a Participant's vested account
balance in his or her Employer Profit Sharing Contribution and
Employer Matching Contribution Accounts is zero, the Participant
shall be deemed to have received a distribution of such vested
account balance. A Participant's vested account balance shall
not include accumulated deductible employee contributions within
the meaning of Code Section 72(o)(5)(B) for Plan Years beginning
prior to January 1, 1989.
In all other cases, the nonvested portion of a Participant's
Employer Profit Sharing Contribution and Employer Matching
Contribution Accounts shall be treated as a forfeiture and
reallocated pursuant to the provisions of Section 8.02(a) when
such Participant incurs five consecutive One-Year Breaks in
Service.
(c) No forfeitures shall occur solely as a result of
withdrawal of Deductible Voluntary Contributions, Nondeductible
Voluntary Contributions, or Rollover Contributions.
8.03 Reemployment
(a) If a former Participant who was not fully vested
in his or her Employer Profit Sharing Contribution and/or
Employer Matching Contribution Accounts at termination of
employment is reemployed after incurring five consecutive One-
Year Breaks in Service, he or she shall have no right to any
forfeited account balance. Any undistributed vested portion of
his or her Employer Profit Sharing Contribution Account shall be
held in a separate vested Employer Profit Sharing Contribution
Account, and future Employer Profit Sharing Contributions on his
or her behalf shall be credited to a new Employer Profit Sharing
Contribution Account until such Participant becomes fully vested
in such Account where upon such Participant's old and new
Employer Profit Sharing Contribution Accounts shall be merged.
Any undistributed vested portion of his or her Employer Matching
Contribution Account shall be held in a separate vested Employer
Matching Contribution Account, and future Employer Matching
Contributions on his or her behalf shall be credited to a new
Employer Matching Contribution Account until such Participant
becomes fully vested in such Account whereupon such Participant's
old and new Employer Matching Contribution Accounts shall be
merged.
(b) The following provisions shall apply with respect
to a former Participant who was not fully vested in his or her
Employer Profit Sharing Contribution and/or Employer Matching
Contribution Accounts at termination of employment, and who is
reemployed before he or she incurs five consecutive One-Year
Breaks in Service:
(i) If no amounts have been forfeited from his or
her Employer Profit Sharing Contribution Account and/or Employer
Matching Contribution Account, the amounts remaining in his or
her Employer Profit Sharing Contribution Account and/or Employer
Matching Contribution Account shall be restored to his or her
credit.
(ii) If the nonvested portion of the Participant's
Employer Profit Sharing Contribution Account and/or Employer
Matching Contribution Account has been forfeited, and the
Participant has previously received the vested portions of his or
her Employer Profit Sharing Contribution Account and/or Employer
Matching Contribution Account, he or she shall have the right to
repay to the Plan the full amount of such prior distribution.
Such repayment must be made on or before the earlier of five
years after the first date on which the Participant is
subsequently reemployed by the Employer, or the close of the
first period of five consecutive One-Year Breaks in Service
following the date of distribution. Upon such repayment, the
amount of any such repayment plus the value of the forfeited
portion of such Accounts as of the date of forfeiture shall be
credited to such Accounts.
(iii) If the Participant is deemed to have
received a distribution from his Employer Profit Sharing
Contribution Account and/or Employer Matching Contribution
Account pursuant to Section 8.02(b), and his entire Employer
Profit Sharing Contribution Account and/or Employer Matching
Contribution Account has been forfeited, upon the reemployment of
such Participant, the value of his Employer Profit Sharing
Contribution Account and/or Employer Matching Contribution
Account as of the date of the forfeiture shall be restored to his
credit within a reasonable time after his or her reemployment.
(iv) Restoration of the previously forfeited
amount shall be funded by current unallocated forfeitures,
additional Employer contributions, or any combination thereof at
the Employer's discretion. Such restoration shall not be treated
as an Annual Addition under Article V.
(v) Any Employer Profit Sharing Contributions to
which such Participant becomes entitled after reemployment shall
be credited to his or her Employer Profit Sharing Contribution
Account. Any Employer Matching Contributions to which such
Participant becomes entitled after reemployment shall be credited
to his or her Employer Matching Contribution Account. The
portion of such Accounts to which he or she will be entitled upon
subsequent termination of employment will be based upon his or
her aggregate Vesting Years before and after the break.
ARTICLE IX. DISTRIBUTIONS UPON DEATH
9.01 Distributions at Death. If a Participant dies at a
time when he or she has a vested Account balance, this Section
shall apply with respect to such vested Account balance.
(a) The Trustee shall, at the direction of the
Administrator, distribute a Participant's vested Account balance
in accordance with the provisions of this Article IX. The
Administrator's direction shall include notification of the
Participant's death, the existence or non-existence of a
surviving spouse; the amounts, or method of calculating the
amounts, to be distributed on given dates; and such other
information required by the Trustee.
(b) If the Participant has validly named a Beneficiary
or Beneficiaries in compliance with Article XVII, his or her
vested Account balance shall be distributed to the Beneficiary or
Beneficiaries so named. To the extent that any portion of a
vested Account balance of a deceased Participant is not governed
by an effective Designation of Beneficiary, that portion of the
vested Account balance shall be distributed to the deceased
Participant's Spouse or if that is not possible, to the estate of
the deceased Participant.
(c) If the Participant has validly elected a form of
distribution permitted under Section 10.02 which complies with
the applicable provisions of subsection (d) below (a "permissible
form of distribution") with respect to his or her vested Account
balance, such vested Account balance shall be distributed in
accordance with such election whether or not distributions have
commenced prior to the Participant's death. With respect to any
portion of a deceased Participant's vested Account balance for
which the Participant had not validly elected a permissible form
of distribution prior to his or her death, distribution shall be
made in such permissible form as the Participant's Beneficiary
(or Beneficiaries) may elect in writing with the Trustee. In the
absence of such a valid election by the Beneficiary, the
Participant's vested Account balance shall be distributed as
follows:
(i) if distributions have commenced prior to the
Participant's death, in the form selected by the Participant,
(ii) if distributions have not commenced prior to
the Participant's death, and if the Beneficiary is the Spouse, in
substantially equal installment payments over the Spouse's
Applicable Life Expectancy, or, if the Beneficiary is not the
Spouse, in a lump sum.
(d) Distribution to the Participant's Beneficiary
shall be made according to the following provisions:
(i) If the Participant dies before distributions
have commenced on account of the Participant's attainment of his
or her First Required Distribution Year and if the Beneficiary is
not the Spouse, the Participant's entire vested Account balance
must be distributed to the Participant's Beneficiary either
(A) on or before December 31 of the calendar year during which
occurs the fifth anniversary of the Participant's death, or (B)
in substantially equal annual or more frequent installments over
a period not exceeding the Applicable Life Expectancy of the
oldest Beneficiary (as determined as of the date of the
Participant's death) provided that such distributions commence
before the second January 1 which follows the Participant's
death.
(ii) If the Participant dies before distributions
have commenced on account of the Participant's attainment of his
or her First Required Distribution Year and if the Beneficiary is
the Spouse, the Participant's entire vested Account balance must
be distributed to the Participant's Spouse either (A) in a lump
sum payable, or in installments which will be completely paid, on
or before December 31 of the calendar year during which occurs
the fifth anniversary of the date of the Participant's death, or
(B) in annual installments over the Spouse's life or a period not
longer than the Spouse's Applicable Life Expectancy provided that
such distribution is commenced before the later of (1) the first
January 1 following the calendar year during which the
Participant would have attained age 70 1/2 had the Participant
not died or (2) the second January 1 which follows the
Participant's death.
(iii) If a Participant dies after
distributions have commenced on account of the Participant's
attainment of his or her First Required Distribution Year,
distributions to the Participant's Spouse, Beneficiary or estate
shall continue over a period at least as rapid as the period
selected by the Participant.
(e) If a Beneficiary dies after the Participant (or in
the case of a Beneficiary designated by another Beneficiary,
after such other Beneficiary) and before such deceased
Beneficiary receives full payment of the portion of the vested
Account balance to which he or she is entitled, the Trustee
shall, upon direction of the Administrator, distribute the funds
to which the deceased Beneficiary is entitled to the Beneficiary
or Beneficiaries validly named on the most recent Designation of
Beneficiary filed by the deceased Beneficiary. To the extent
that any portion of the funds to which the deceased Beneficiary
was entitled are not governed by an effective Designation of
Beneficiary, the funds shall be distributed to the deceased
Beneficiary's surviving Spouse, or if that is not possible, to
the estate of the deceased Beneficiary. The Administrator's
direction shall include notification of the Beneficiary's death
and the existence or non-existence of a surviving Spouse and such
other information required by the Trustee. Such funds shall be
distributed as follows:
(i) If distributions had commenced before the
Participant's death, distribution to the beneficiary of a
deceased Beneficiary shall continue over a period at least as
rapid as that selected by the Participant.
(ii) If the deceased Beneficiary was the surviving
Spouse of the Participant and had not begun to receive
distributions from the Participant's Account at the time of his
or her death, the Participant's vested Account balance shall be
distributed to the deceased Beneficiary's Beneficiary according
to the provisions of Sections 9.01(c) - (d) applied as if the
deceased Beneficiary were the Participant. In addition, the
surviving Spouse's Beneficiaries shall be treated as
Beneficiaries during any future application of this Section.
(iii) If neither subparagraph (i) nor (ii)
above apply, the Participant's vested Account balance shall be
distributed to the deceased Beneficiary's Beneficiary either
(A) on or before December 31 of the calendar year during which
occurs the fifth anniversary of the Participant's death or (B) in
substantially equal annual or more frequent installments over the
remainder of the Applicable Life Expectancy of the oldest
Beneficiary of the Participant as determined at the Participant's
death provided that distributions commence before the second
January 1 which follows the Participant's death.
9.02 Children as Beneficiaries. For the purposes of Section
9.01, to the extent provided by Treasury regulations, any
distribution paid to a Participant's child shall be treated as
paid to the Participant's surviving Spouse if the remaining
portion of the Participant's vested Account balance with respect
to which such child is a Beneficiary becomes payable to the
surviving Spouse when the child reaches the age of majority (or
such other designated event permitted under the Treasury
regulations).
9.03 Nonconsensual Distributions to Beneficiaries.
Notwithstanding any provision of this Article, Article X or
Article XXIV to the contrary, the Administrator may direct the
entire vested Account balance of a deceased Participant
(exclusive of his or her Rollover Account and Deductible
Voluntary Contribution Account) be distributed if the amount
distributed will be equal to $3,500 or less. The Administrator
may make such direction without obtaining the consent of any
Beneficiary.
9.04 Eligible Rollover Distributions. If the Participant's
Beneficiary is a surviving Spouse, the provisions of
Section 10.07 shall apply to distributions made pursuant to
Article IX.
ARTICLE X. DISTRIBUTIONS AFTER SEPARATION FROM SERVICE
10.01 Commencement of Distributions. The Trustee shall,
at the direction of the Administrator, distribute a Participant's
vested Account balance in accordance with the provisions of this
Article X. The Administrator's direction shall include the
amounts, or method of calculating the amounts, to be distributed
on given dates and such other information required by the
Trustee. In the event distribution is to be made in the form of
an annuity contract, the Administrator shall also direct the
Trustee with regard to the purchase of such a contract, including
the selection of an appropriate insurance carrier. Except as
otherwise provided in this Article X, distributions of a
Participant's vested Account balance shall commence within
60 days after the close of the Plan Year during which occurs the
later of (a) the Participant's Normal Retirement Date or (b) the
earlier of (i) the Participant's separation from Service or
(ii) the end of his or her First Required Distribution Year.
Payment of benefits may, at the discretion of the Trustee, be
paid directly to the Participant or to the Administrator, as
payee agent. If the Participant's vested Account balance
(exclusive of his or her Rollover Account and Deductible
Voluntary Contribution Account) is greater than $3,500, written
consent of the Participant is required for any earlier
distribution. A Participant may file an election with the
Administrator to request that distributions commence in
accordance with one of the following options provided that the
distribution shall otherwise comply with the requirements of the
Plan (including, but not limited to, Section 10.03):
(A) Distributions commencing before the Participant's
Normal Retirement Date if the Participant is Disabled or
experiences a separation from Service.
(B) Distributions commencing after the normal time of
distribution described above; provided, however, that any such
deferred distribution must commence no later than 60 days after
the end of the Participant's First Required Distribution Year.
10.02 Forms of Distribution.
(a) Upon a Participant's separation from Service (for
reasons other than death), he or she may file an election with
the Administrator to request to receive a distribution of his or
her vested Account balance in one or more of the following
optional forms, provided that the distribution shall otherwise
comply with the requirements of this Plan and provided that the
optional forms have been designated by the Employer in the
Adoption Agreement:
(i) Distribution of the Participant's entire
vested Account balance in monthly installments over a period
equal to the shorter of 120 months or the Applicable Life
Expectancy. The monthly amount shall normally be the balance of
the Participant's vested Account balance divided by the remaining
number of months in such period, all rounded to the nearest cent.
However, the amount of each monthly installment may be recomputed
and adjusted from time to time no more frequently than monthly as
the Trustee may reasonably determine.
(ii) Distribution of the Participant's entire
vested Account balance in a lump sum.
(iii) Distribution of the Participant's entire
vested Account balance in installment payments of a fixed amount,
such payments to be made until exhaustion of the Participant's
vested Account balance.
(iv) Distribution in kind.
(v) Any reasonable combination of the foregoing
or any reasonable time or manner of distribution within the
above-stated limitations.
(vii) Any distribution option that is a
"protected benefit" under Code Section 411(d)(6).
(b) To the extent permitted by applicable law and
consistent with the provisions of this Article X, amounts
distributed pursuant to this Article X shall be allocated on a
pro rata basis among the Participant's Accounts and among the
Designated Investments in which each Account is invested;
provided, however, that the Participant may specify to the
Administrator an alternative manner in which distributions shall
be so allocated.
10.03 Required Minimum Distributions. In the case of
each Participant, the annual distribution from his or her Account
shall be determined by the Administrator in accordance with the
regulations under Code Section 401(a)(9), including the minimum
distribution incidental benefit requirement of
Section 1.401(c)(9)-2 of such regulations and must equal or
exceed the amount equal to the quotient obtained by dividing the
Participant's Account balance at the beginning of the calendar
year by the lesser of (a) the Applicable Life Expectancy, or
(b) if the Participant's Spouse is not the Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4
of Section 1.401(a)(9)-2 of the regulations under Code
Section 401(a)(9).
10.04 Nonconsensual Distributions. Notwithstanding any
provision of Article IX, this Article or Article XXIV to the
contrary, the Administrator may direct that the entire vested
Account balance of a Participant (exclusive of his or her
Rollover Account and Deductible Voluntary Contribution Account)
be distributed if the amount distributed will be equal to $3,500
or less. The Administrator may make such direction (a) only if
the Participant has not previously attained his or her Annuity
Starting Date and (b) regardless of whether the Participant
requests or otherwise consents to such distribution.
10.05 Special One-Time Distribution Election.
Notwithstanding any Plan provision to the contrary, distribution
on behalf of any Participant, including a 5% owner, may be made
in accordance with the following requirements (regardless of when
such distribution commences):
(a) The distribution is one which would not have
disqualified the Plan under Code Section 401(a)(9) as it was in
effect prior to its amendment by the Deficit Reduction Act of
1984.
(b) The distribution is in accordance with a method of
distribution designated by the Participant whose interest in the
Plan is being distributed or, if the Participant has died, by a
beneficiary of such Participant.
(c) Such designation was in writing, was signed by the
Participant or the beneficiary, and was made before January 1,
1984.
(d) The Participant had accrued a benefit under the
Plan as of December 31, 1983.
(e) The method of distribution designated by the
Participant or the beneficiary specifies the time at which
distribution will commence, the period over which distributions
will be made, and in the case of any distribution upon the
Participant's death, the Beneficiaries of the Participant are
listed in order of priority.
(f) If the distribution is one to which the provisions
of Article XXIV hereof would otherwise have applied and the
Participant is married, the Participant's Spouse consents to the
election in a writing filed with the Administrator.
A distribution upon death will not be covered by this
Section unless the information in the designation contains the
required information described above with respect to the
distributions to be made upon the death of the Participant.
For any distribution which commenced before January 1, 1984,
but continues after December 31, 1983, the Participant, or the
Beneficiary, to whom such distribution is being made, will be
presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirement in subsections (a) and (e) above.
If a designation is revoked, any subsequent distribution
must satisfy the requirements of Code Section 401(a)(9) as
amended. Any changes in the designation will be considered to be
a revocation of the designation. However, the mere substitution
or addition of another Beneficiary (one not named in the
designation) under the designation will not be considered to be a
revocation of the designation, so long as such substitution or
addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for
example, by altering the relevant measuring life).
10.06 Distribution on Account of Plan Termination.
Subject to the provisions of Section 11.04, if the Employer
terminates the Plan or completely discontinues making Employer
Contributions to the Trust, the Administrator has discretion
pursuant to Section 20.03 below to distribute, or retain in the
Trust, Participants' Account balances.
10.07 Eligible Rollover Distribution.
(a) This Section applies to distributions made by the
Trustee on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit
a Distributee's election under this Section, a Distributee may
elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover.
(b) An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or life expectancies) of the
Distributee and the Distributee's designated beneficiary, or for
a specified period of ten years or more; any distribution to the
extent such distribution is required under Code Section
401(a)(9); and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(c) An Eligible Retirement Plan is an individual
retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b),
an annuity plan described in Code Section 403(a), or a qualified
trust described in Code Section 401(a), that accepts the
Distributee's Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution to the surviving
Spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(d) A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving Spouse and the Employee's or former Employee's Spouse
or former Spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the
Code, are Distributees with regard to the interest of the Spouse
or former Spouse.
(e) A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
If a distribution is one to which Code
Sections 401(a)(11) and 417 do not apply, such distribution may
commence less than 30 days after the notice required under
Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
(i) the Administrator clearly informs the
Participant that the Participant has a right to a period of at
least 30 days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(ii) the Participant, after receiving the notice,
affirmatively elects a distribution.
ARTICLE XI. IN-SERVICE WITHDRAWALS
11.01 In-service Withdrawal from Participant's Accounts.
This Section 11.01 shall apply only to Participants who remain in
the employ of the Employer.
(a) Nondeductible Voluntary Contribution Account. A
Participant may withdraw all or a portion of his or her
Nondeductible Voluntary Contribution Account upon notice to the
Administrator; provided, however, that a Participant who
withdraws any amount from his or her Nondeductible Voluntary
Contribution Account which previously generated an Employer
Matching Contribution shall be prohibited from making a
nondeductible voluntary contribution for six calendar months,
beginning with the calendar month immediately following the date
of withdrawal.
(b) Rollover Account. A Participant may withdraw all
or a portion of his or her Rollover Account upon notice to the
Administrator.
(c) Deductible Voluntary Contribution Account. A
Participant may withdraw all or a portion of his or her
Deductible Voluntary Contribution Account upon notice to the
Administrator.
(d) Employer Profit Sharing Contribution Account.
Upon attainment of his or her Normal Retirement Date, a
Participant may withdraw all or a portion of his or her Employer
Profit Sharing Contribution Account upon notice to the
Administrator. If elected by the Employer in the Adoption
Agreement, a Participant who has not attained his or her Normal
Retirement Date but who is fully vested in his or her Employer
Profit Sharing Contribution may submit a request to the
Administrator for a withdrawal of all or a portion of his or her
Employer Profit Sharing Contribution Account. The Administrator
may permit such a withdrawal only if the Participant can
demonstrate to the satisfaction of the Administrator that he or
she is suffering from "hardship" as defined in Section 11.02
below.
(e) Employer Matching Contribution Account. Upon
attainment of his or her Normal Retirement Date, a Participant
may withdraw all or a portion of his or her Employer Matching
Contribution Account upon notice to the Administrator. If
elected by the Employer in the Adoption Agreement, a Participant
who has not attained his or her Normal Retirement Date but who is
fully vested in his or her Employer Matching Contribution Account
may submit a request to the Administrator for a withdrawal of all
or a portion of his or her Employer Matching Contribution
Account. The Administrator may permit such a withdrawal only if
the Participant can demonstrate to the satisfaction of the
Administrator that he or she is suffering from "hardship" as
defined in Section 11.02 below.
(f) Salary Reduction Contribution Account, Deferred
Cash Contribution Account and Qualified Nonelective Contribution
Account. Upon attainment of his or her Normal Retirement Date, a
Participant may withdraw all or a portion of his or her Salary
Reduction Contribution Account, Deferred Cash Contribution
Account and/or Qualified Nonelective Contribution Account upon
notice to the Administrator. If elected by the Employer in the
Adoption Agreement, a Participant who has not attained his or her
Normal Retirement Date may submit a request to the Administrator
for a withdrawal of all or a portion of his or her Salary
Reduction Contribution Account or Deferred Cash Contribution
Account (but not earnings on such accounts after December 31,
1988). The Administrator may permit such a withdrawal only if
the Participant can demonstrate that he or she is suffering from
"hardship" as defined in Section 11.02 below.
11.02 Rules Governing Hardship Withdrawals. A
Participant shall be considered to be suffering from "hardship"
only if the distribution is both made on account of an immediate
and heavy financial need of the Participant and is necessary to
satisfy such financial need, determined in accordance with
objective, nondiscretionary standards as set forth in this
Section.
(a) An "immediate and heavy financial need" shall be
deemed to include, and shall be limited to, the following:
(i) Expenses incurred or necessary for medical
care described in Code Section 213(d) of the Participant, his or
her Spouse, or any dependents of the Participant (as defined in
Code Section 152);
(ii) Purchase (excluding mortgage payments) of a
principal residence for the Participant;
(iii) Payment of tuition, related educational
fees and room and board for the next 12 months of post-secondary
education for the Participant, his or her Spouse, children, or
dependents; or
(iv) The need to prevent the eviction of the
Participant from his or her principal residence or foreclosure on
the mortgage of the Participant's principal residence.
(b) A distribution will be treated as "necessary" to
satisfy an immediate and heavy financial need of the Participant
only if:
(i) The Participant has obtained all
distributions, other than hardship distributions, and all
nontaxable loans under all plans maintained by the Employer;
(ii) All plans maintained by the Employer provide
that the Participant's Salary Reduction Contributions and/or
Deferred Cash Contributions (and Nondeductible Voluntary
Contributions) will be suspended for 12 months after the receipt
of the hardship distribution;
(iii) The distribution is not in excess of the
amount of an immediate and heavy financial need (including
amounts necessary to pay any federal, state or local income taxes
or penalties reasonably anticipated to result from the
distribution); and
(iv) All plans maintained by the Employer provide
that the Participant may not make Salary Reduction Contribution
and/or Deferred Cash Contributions for the Participant's taxable
year immediately following the taxable year of the hardship
distribution in excess of the applicable limit under Code Section
402(g) for such taxable year less the amount of such
Participant's Salary Reduction Contributions and/or Deferred Cash
Contributions for the taxable year of the hardship distribution.
11.03 Manner of Distribution. A distribution under this
Article shall be made in a lump-sum payment to the Participant.
In each case in which a partial distribution is made from a
Participant's Account, the amount distributed from such Account
pursuant to this Article XI shall be allocated on a pro rata
basis among the Designated Investments in which such Account is
invested; provided, however, that the Administrator or the
Participant may specify an alternative manner in which such
distribution shall be so allocated.
11.04 Limitation on Distributions. Notwithstanding
anything to the contrary elsewhere herein, the amounts credited
to a Participant's Salary Reduction Contribution Account and
Deferred Cash Contribution Account, and Qualified Nonelective
Contribution Account shall not be distributable to a Participant
or his or her Beneficiary until the Participant separates from
Service on account of retirement, disability, death or
termination of employment or upon the occurrence of one of the
following events:
(a) Termination of the Plan without the establishment
of another defined contribution plan, other than an employee
stock ownership plan (as defined in Code Section 4975(e) or
Section 409) or a simplified pension plan as defined in Code
Section 408(k).
(b) The disposition by a corporation to an unrelated
corporation of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) used in a trade or business of
such corporation if such corporation continues to maintain this
Plan after the disposition, but only with respect to Participants
who continue employment with the corporation acquiring such
assets.
(c) The disposition by a corporation to an unrelated
entity of such corporation interest in a subsidiary (within the
meaning of Code Section 409(d)(3)) if such corporation continues
to maintain this Plan, but only with respect to Participants who
continue employment with such subsidiary.
(d) The attainment of age 59-1/2 by the Participant.
(e) In the case of the Participant s Salary Reduction
Contribution Account and Deferred Cash Contribution Account, the
hardship of the Participant as described in Section 11.02.
All distributions that may be made pursuant to one or more
of the foregoing distributable events are subject to the spousal
and Participant consent requirements (if applicable) contained in
Code Sections 411(a)(11) and 417. In addition, distributions
made after March 31, 1988, that are triggered by an event
enumerated in Sections 11.04(a)-(c) must be made in a lump sum.
ARTICLE XII. LOANS
12.01 Availability of Loans. If, in the Adoption
Agreement, the Employer has specified that loans to Participants
are permitted, the Loan Trustee shall, upon the direction of the
Administrator, make one or more loans, including any renewal
thereof, to a Participant who is an Employee or, in the
discretion of the Administrator, a former Employee (other than a
Participant who is an Owner-Employee). Any such loan shall be
subject to such terms and conditions as the Administrator shall
determine pursuant to a written uniform policy adopted by the
Administrator for this purpose, which policy shall be
incorporated herein as part of the Plan, at least as restrictive
as required by this Article, and, contain specific provisions
setting forth: (a) the identity of the person or positions
authorized to administer the loan program; (b) a procedure for
applying for loans; (c) the basis upon which loans will be
approved or denied; (d) limitations, in addition to those
described in this Article XII, on the types and amount of loans
offered; (e) the procedure under the program for determining a
reasonable rate of interest; (f) the types of collateral which
may secure a loan; and (g) the events constituting default and
the steps that will be taken to preserve plan assets in the event
of such default.
12.02 Spousal Consent Required. If this Plan is adopted
as a plan which is subject to the special annuity rules discussed
in Article XXIV below, to obtain a loan, a Participant must
obtain the consent of his or her Spouse, if any, within the
90-day period before the time his or her Account balance is used
as security for the loan. Furthermore, a new consent is required
if an increase in the amount of the security is necessary and any
of the remaining balance of the Account is used. A spousal
consent to a loan must be in writing, witnessed by a Plan
representative or notary public, and acknowledge that as a result
of a default in repayment of the loan the Spouse may be entitled
to a lesser death benefit than he or she would otherwise receive
under the Plan. A Spouse shall be deemed to consent to any loan
which is outstanding at the time of his or her marriage to the
Participant.
12.03 Equivalent Basis. No such loan may be made to a
disqualified person within the meaning of Code Section 4975(e),
unless such loans are available to all active Participants on a
reasonably equivalent basis and are not made available to Highly
Compensated Employees in an amount which, when stated as a
percentage of any such Participant's Account, is greater than is
available to any other Participants.
12.04 Limitation on Amount. The amount of any such
loan, when added to the outstanding balance of all other loans
from the Trust (and any other qualified retirement plans of the
Employer) to the Participant, shall not exceed the lesser of:
(a) $50,000 reduced by the amount by which (i) the
highest outstanding balance of all such loans to the Participant
during the one-year period ending on the day before the date on
which the loan is made exceeds (ii) the outstanding balance of
such loans to the Participant on the date on which such loan is
made; or
(b) the amount determined pursuant to the following
chart:
<TABLE>
<CAPTION>
Vested Maximum
Account Balance Amount of Loan
<S> <C>
$0 - $100,000 50% of vested Account balance
over $100,000 $50,000.
</TABLE>
The value of the Participant's Account balance shall be as
determined by the Administrator; provided, however, that such
determination shall in no event take into account the portion of
the Participant's Account attributable to the Participant's
Deductible Voluntary Contribution Account.
12.05 Maximum Term. The term of any such loan shall not
exceed five years; provided, however, that such limitation shall
not apply to any loan used for the purchase of a dwelling unit
which within a reasonable time is to be used (determined at the
time the loan is made) as a principal residence of the
Participant.
12.06 Promissory Note. Any such loan shall be evidenced
by a promissory note executed by the Participant and payable to
the Loan Trustee, on the earliest of (i) a fixed maturity date
meeting the requirements of Section 12.05 above, (ii) the
Participant's death (iii) the Participant's separation from
service if the loan policy does not permit loans to former
Employees. Such promissory note shall evidence such terms as are
required by this Article.
12.07 Adequate Security. Each loan and related
promissory note shall be secured by an assignment of no more than
50 percent of the Participant's Account to the Loan Trustee. A
Participant may also provide such other or additional security
for the loan as the Loan Trustee may require or permit.
12.08 Repayment By Payroll Reduction. In addition to
executing a promissory note, the Participant who desires to take
out a loan shall enter into a payroll reduction agreement with
the Employer or such other form of repayment agreement with the
Employer as the Administrator permits from time to time. The
Participant shall enter into such agreement on or before the date
when the loan is made. Such agreement shall provide that, if the
Participant defaults on the loan while he or she is still an
Employee, the Employer shall be entitled to reduce the
Participant's pay in sufficient increments to ensure that, over a
reasonable period of time, the amount with respect to which the
Participant has defaulted plus any interest owed and any costs of
collection incurred by the Loan Trustee will be repaid to the
Trust. The Employer shall promptly pay to the Loan Trustee all
amounts that the Employer withholds from a Participant's pay
pursuant to such a payroll reduction agreement or other repayment
agreement. The Administrator and/or Loan Trustee shall credit
all amounts withheld from a Participant's pay or collected
pursuant to a repayment agreement to the relevant Participant's
Account as payments of amounts owed on the note.
12.09 Interest. Any such loan shall be subject to a
reasonable rate of interest.
12.10 Level Amortization. A Participant shall repay the
principal of any loan according to a schedule which shall provide
for level amortization over a period of the loan, with payments
to be made no less frequently than quarterly.
12.11 Additional Repayment Rules. If a Participant
fails to make a payment in accordance with the schedule developed
in accordance with the requirements of Section 12.10 above, the
Administrator shall notify the Participant in writing that if the
relevant loan principal and accumulated and unpaid interest
thereon is not paid within 30 days, action will be taken to
collect such amounts plus any cost of collection. When
collecting such amounts, the Loan Trustee may utilize any of the
remedies available to it including those provided by the
promissory note, a payroll reduction agreement entered into
pursuant to Section 12.08 and applicable law. If a note is not
paid when the Participant's benefits hereunder are to be
distributed, then any unpaid portion of such loan, and unpaid
interest thereon, and any costs of collection incurred by the
Loan Trustee shall be deducted by the Loan Trustee from the
Participant's Account before benefits are paid from or purchased
out of the Account. Such deduction shall, to the extent thereof,
cancel the indebtedness of the Participant. Notwithstanding any
implication of the preceding sentence to the contrary, no
attachment of the Participant's Account which is subject to
Section 11.04 shall occur until a distributable event occurs as
specified in Section 11.04.
12.12 Accounting. Loans shall be made on a pro rata
basis among the Participant's Accounts and among the Designated
Investments in which each Account is invested and shall be
treated as an investment of each such Account, provided, however,
that the Administrator or the Participant may specify an
alternative manner in which such loan shall be so allocated.
Notwithstanding the foregoing, no loans shall be made from the
Participant's Deductible Voluntary Contribution Account, and
without the consent of the Distributor, no loans shall be made
from the Participant's Accounts invested in qualifying employer
securities.
12.13 Administration of Loans. Except as expressly
provided otherwise in this Article XII, the Administrator shall
have the sole responsibility for all administrative tasks
relating to loans made pursuant hereto including, but not limited
to, the issuance of any appropriate notices or information
returns required under the Code or other applicable law.
12.14 Precedence. This Article overrides Section 18.01
below.
ARTICLE XIII. TRUST PROVISIONS
13.01 Manner of Investment. Except as expressly
provided otherwise herein, all contributions made pursuant to the
Plan and any assets in which such contributions shall be invested
or reinvested shall be held in trust by one or more Trustee
pursuant to the provisions of this Agreement of Trust. Certain
assets of the Plan (including, but not limited to, insurance
contracts and shares of securities of an Employer that are not
publicly traded) may be held by the Administrator or such other
entity as the Trustee may appoint as subcustodian on behalf of
the Trustee. Except to the extent that a Participant's Account
is invested in a loan pursuant to Article XII hereof, the Account
of a Participant may only be invested and reinvested in
Designated Investments, unless the Distributor consents to such
other investments. If the Administrator or the Participant, as
the case may be, has elected to have a portion of an Account
invested in investments other than Designated Investments, and
the Distributor has given its consent, the Trustee shall invest
such amount in such investments, directed by the Administrator or
other person with investment discretion and in accordance with
Section 13.03 hereof. Both the Designated Investments and
investments other than Designated Investments available for
investment may be limited by the Administrator who may impose
separate rules for separate accounts or for terminated
Participants. Investment in more than one Designated Investment
is not permitted unless the value of the Participant's Account
and the value of the investment in each additional Designated
Investment exceed amounts from time to time determined by the
Distributor.
If the Trustee invests in one or more collective investment
funds (whether or not the Trustee acts as trustee thereof) for
the collective investment of assets of employee pension or
profit-sharing trusts pursuant to Revenue Ruling 81-100, and such
collective investment fund constitutes a qualified trust under
the applicable provisions of the Code, such collective investment
funds shall constitute part of the Plan, and the instrument
creating such funds shall constitute part of this Agreement of
Trust while any portion of the Trust is so invested.
13.02 Investment Decision.
(a) The decision as to the investment of an Account
shall be made by the person designated in the Adoption Agreement
or as provided in this Section 13.02, and the Trustee shall have
no responsibility for determining how an Account is to be
invested or to see that investment directions communicated to it
comply with the terms of the Plan. Each such person, including
the Administrator, a Participant or a Beneficiary, is hereby
designated a "named fiduciary" within the meaning of Sections
402(a)(2) and 403(a)(1) of the Act, with respect to the Accounts
over which he or she may exercise investment control. If the
decision is made by the Participant, then (subject to Section
13.02(d) below) the Participant shall convey investment
instructions to the Administrator and the Administrator shall
promptly transmit those instructions to the Trustee. Further, if
the decision is to be made by the Participant, the right to make
such a decision shall remain with the Participant upon retirement
and shall pass to his or her Beneficiary upon death; provided,
however, that upon termination of Service by a Participant, the
Administrator shall have the right to make investment decisions
with respect to the portion of such Participant's Account which
is not vested pursuant to Article VIII and any suspense account
maintained under the Plan. In the event that all or a portion of
a Participant's Account is assigned to an "alternate payee"
pursuant to a "qualified domestic relations order," such
alternate payee shall have the right to make investment decisions
with respect to such portion and any earnings thereon to the same
extent as the Participant.
(b) The person designated to make the decision as to
the investment of an Account may direct that the investment
medium of an Account be changed, provided that no such change may
be made from or to an investment other than a Designated
Investment except to the extent permitted under Section 13.01
above and by the terms of that other investment vehicle.
Notwithstanding the foregoing, the Administrator may from time to
time establish uniform, nondiscretionary rules with respect to
the frequency or times at which changes in the investment medium
of the Account may be made. If the Distributor determines in its
own judgment that there has been trading of Designated
Investments in the Accounts of the Participants, any Designated
Investment may refuse to sell to such Accounts. When an
investment is being made or changed, the person designated to do
so shall specify the type of Account to which the change refers.
(c) Except as provided in subsection (a) above, if any
decision as to investments is to be made by the Administrator, it
shall be made on a uniform basis with respect to all
Participants.
(d) The Administrator and the Trustee may adopt
procedures permitting Participants to convey their investment
instructions directly to the Trustee or to the transfer agent for
the Designated Investment or for any other investment permitted
by the Distributor.
(e) Whenever a Participant is the person designated to
make the decision as to the investment of an Account, the
Administrator shall ascertain that the Participant has received a
copy of the current prospectus relating to any Designated
Investment in which such Account is to be invested where required
by any state or federal law. With respect to contributions
designated for investment by a Participant, by remitting such a
contribution to the Trustee, the Administrator shall be deemed to
warrant to the Trustee for the benefit of the appropriate
Designated Investment and its principal underwriter (if
applicable) that the Participant has received all such
prospectuses. By remitting any other contribution to the
Trustee, the Administrator shall be deemed to warrant to the
Trustee for the benefit of the appropriate Designated Investment
and its principal underwriter (if applicable) that the
Administrator has received a current prospectus of any Designated
Investment in which the contribution is to be invested where
required by any state or federal law.
13.03 Directed Powers of the Trustee. To the extent
that a portion of the Trust assets are invested other than in
Designated Investments pursuant to Section 13.01 above, the
Trustee shall have the following powers and authority in the
administration of the Trust to be exercised at the direction of
the Administrator or other person with investment discretion:
(a) To purchase, receive or subscribe for any
securities or other property and to retain in trust such
securities or other property.
(b) To sell for cash or credit, to convert, redeem, or
exchange securities for other securities or other property, to
tender securities pursuant to tender offers, or otherwise to
dispose of any securities or other property at any time held by
the Trustee.
(c) To settle, compromise, or submit to arbitration
any claims, debts or damages, due or owing to or from the Trust
Fund, to commence or defend suits or legal proceedings and to
represent the Trust Fund in all suits or legal proceedings;
provided, however, that the Trustee shall have the right, in its
sole discretion, to bring, join in or oppose any such suits or
legal proceedings where it may be adversely affected by the
outcome, individually or as Trustee, or where it is advised by
counsel that such action is required on its part by the Act or
other applicable law.
(d) To exercise any conversion privilege and/or
subscription right available in connection with any securities or
other property at any time held by it; to oppose or to consent to
the reorganization, consolidation, merger or readjustment of the
finances of any corporation, company or association, or to the
sale, mortgage, pledge or lease of the property of any
corporation, company or association, the securities of which may
at any time be held by it and to do any act with reference
thereto, including the exercise of options, the making of
agreements or subscriptions and the payment of expenses,
assessments or subscriptions which may be deemed necessary or
advisable in connection therewith, and to hold and retain any
securities or other property which it may so acquire, and to
deposit any property with any protective, reorganization or
similar committee or with depositories designated thereby, to
delegate power thereto, and to pay or agree to pay part of the
expenses and compensation of any such committee and any
assessments levied with respect to property so deposited;
provided, however, that the Trustee shall not be responsible for
taking any action or exercising any right described in this
subsection (d) with respect to securities or other property of
the Trust Fund unless, at least three business days prior to the
date on which such power is to be exercised, it or its agents
(i) are in actual possession or control of such securities or
property (if such possession or control is necessary to exercise
any such power) and (ii) have received instructions from the
Administrator to exercise any such power.
(e) To exercise, personally, by proxy or by general or
limited power of attorney, any right appurtenant to any
securities or other property held by it at any time.
(f) To invest and reinvest all or any part of the
assets of the Trust Fund, and to hold part of the Trust Fund
uninvested.
(g) To employ suitable agents and counsel and to pay
their reasonable expenses and compensation as expenses of the
Trust.
(h) To purchase, enter into, sell, hold and generally
deal in any manner in and with contracts for the immediate
delivery of financial instruments of any issuer or of any other
property, to grant, purchase, sell, exercise, permit to exercise,
permit to be held in escrow and otherwise to acquire, dispose of,
hold and generally deal in any manner with or in all forms of
options in any combination; and, in connection with its exercise
of the powers hereinabove granted, to deposit any securities or
other property as collateral with any broker-dealer or other
person, and to take all other appropriate action in connection
with such contracts.
(i) To deposit or pledge any securities or other
property as collateral with any broker-dealer or other person
(including the Trustee), and to permit securities or other
property to be held by or in the name of others or in
transferable form.
(j) To borrow money, with or without security, from
any legally permissible source, to encumber property of the Trust
Fund to secure repayment of such indebtedness, to assume liens on
properties acquired by the Trust, and to acquire properties
subject to liens.
(k) To form corporations and to create trusts to hold
title to any securities or other property of the Trust Fund.
(l) To acquire and hold securities which constitute
qualifying employer securities with respect to a Plan (as such
term is defined in Section 407 of the Act); provided that the
Trustee shall have no responsibility for determining whether such
acquisition or holding complies with the Act; and provided
further that the Administrator shall be responsible for filing
all reports required under federal or state securities laws with
respect to the Trust Fund's ownership of qualifying employer
securities (including without limitation any reports required
under Section 13 or 16 of the Securities Exchange Act of 1934, as
amended) and shall immediately notify the Trustee in writing of
any requirement to stop purchases or sales of employer securities
pending the filing of any report, and the Trustee shall provide
to the Administrator such information on the Trust Fund's
ownership of qualifying employer securities as the Administrator
may reasonably request in order to comply with federal or state
securities laws and the Act;
(m) To convert any monies into any currency through
foreign exchange transactions (which may be effected with the
Trustee or an affiliate of the Trustee to the extent permitted
under the Act); and
(n) Generally, to do all acts, whether or not
expressly authorized, which may be considered necessary or
desirable for the protection or enhancement of the Trust Fund or
to carry out any of the foregoing powers and the purposes of the
Trust Fund.
13.04 Discretionary Powers of the Trustee. The Trustee
shall have the following powers and authority in the
administration of the Trust to be exercised in its sole
discretion:
(a) To register any securities held by it hereunder in
its own name or in the name of a nominee with or without the
addition of words indicating that such securities are held in a
fiduciary capacity and to hold any securities in bearer form and
to deposit any securities or other property in a depository,
clearing corporation, or similar corporation, either domestic or
foreign.
(b) To make, execute and deliver, as Trustee
hereunder, any and all instruments in writing necessary or proper
for the accomplishment of any of the powers referred to in
Section 13.03 or in this Section 13.04.
(c) To employ suitable agents, custodians,
subcustodians, and counsel including but not limited to entities
which are affiliates of the Trustee and, subject to applicable
law, to pay their reasonable compensation and expenses as
expenses of the Trust.
(d) With the consent of the Administrator, to loan
securities held in the Trust to brokers or dealers or other
borrowers under such terms and conditions as the Trustee, in its
absolute discretion, deems advisable, to secure the same in any
manner permitted by law and the provisions of this Agreement, and
during the term of any such loan, to permit the loaned securities
to be transferred into the name of and voted by the borrowers or
others, and, in connection with the exercise of the powers
hereinabove granted, to hold any property deposited as collateral
by the borrower pursuant to any master loan agreement in bulk,
together with the unallocated interests of other lenders, and to
retain any such property upon the default of the borrower,
whether or not investment in such property is authorized under
this Agreement, and to receive compensation therefor out of any
amounts paid by or charged to the account of the borrower.
13.05 Limitations in Investments. Notwithstanding the
above, the following restrictions on the investment of a
Participant's Account shall apply:
(a) No part of a Participant's Deductible Voluntary
Contribution Account may be used to purchase life insurance.
(b) At most, less than one-half of the aggregate
Employer Contributions allocated to a Participant's Employer
Contribution Account may be used to pay premiums attributable to
the purchase of ordinary life insurance contracts (life insurance
contracts with both nondecreasing death benefits and
non-increasing premiums).
(c) No more than one-quarter of aggregate Employer
Contributions allocated to a Participant's Account may be used to
pay premiums on term life insurance contracts, universal life
insurance contracts, and all other life insurance contracts which
are not ordinary life insurance contracts.
(d) One-half of the amount used to pay premiums on
ordinary life insurance contracts plus the amount used to pay
premiums on all other life insurance contracts may not exceed an
amount equal to one-quarter of the aggregate Employer
Contributions allocated to a Participant's Account.
(e) No part of a Participant's Account shall be
applied towards the purchase of any insurance contract unless (i)
the Trustee applies for and is the owner of such contract, (ii)
the contract provides that all contract proceeds shall be paid to
the Trustee, and (iii) the contract provides for distributions to
the Participant's Spouse, as necessary to ensure compliance with
the applicable requirements of Articles IX, X, and XXIV.
(f) Amounts used to pay premiums on, or purchase, any
insurance contract(s) on the life of a Participant shall be paid
first from that portion of the Participant's Nondeductible
Voluntary Contribution Account which represents Nondeductible
Voluntary Contributions made by the Participant prior to
January 1, 1987, provided that the Plan, as of May 5, 1986,
permitted withdrawal of Nondeductible Voluntary Contributions
before separation from Service. Amounts used to pay premiums on,
or purchase, any insurance contract(s) on the life of a
Participant which exceed that portion of the Participant's
Nondeductible Voluntary Contribution Account described in the
preceding sentence shall be paid first from the portion of the
Participant's Nondeductible Voluntary Contribution Account which
represents the remaining Nondeductible Voluntary Contributions
made by the Participant and then, except as provided in paragraph
(a) above, from such other of the Participant's Accounts as the
Administrator directs pursuant to the Participant's election.
(g) Except as provided in Section 22.01, any insurance
contract(s) on the life of a Participant will be converted to
cash or distributed to the Participant as of the Participant's
Annuity Starting Date.
(h) Any dividends or credits earned on insurance
contract(s) will be allocated to the Account of the Participant
for whose benefit the contract is held, provided, however, that
if an insurance contract was purchased with a Participant's
Nondeductible Voluntary Contributions, such dividends or credits
which are attributable to the Participant's Nondeductible
Voluntary Contributions shall, to the extent treated as a return
of premium, be credited to the Participant's Nondeductible
Voluntary Contribution Account.
If a Participant's Account is invested in one or more
insurance contracts, the Trustee is required to pay over all
proceeds of the contract(s) to the Participant's Beneficiary or
Beneficiaries in accordance with the terms of this Plan and under
no circumstances shall the Trust retain any contract proceeds.
13.06 Appointment of Investment Manager. Subject to
Sections 13.01 and 13.03 above, the Administrator may designate,
and the Employer may contract with, Scudder, Stevens & Clark
Inc., or its successor or any affiliate, or any other qualified
entity to act as investment manager (within the meaning of the
Act), and may at any time revoke such designation. If an
investment manager is so designated, the Trustee shall follow all
investment directions given by the investment manager with
respect to the retention, investment and reinvestment of the Plan
assets to the extent they are under the control of such
investment manager. If permitted by the Trustee, the investment
manager may issue orders for the purchase and sale of securities,
including orders through any affiliate of such investment
manager. Such an investment manager is specifically allowed to
direct or make investments in any Designated Investment and any
other investments to which the Distributor has given its consent.
The Trustee shall not be liable for following any direction given
by, or any actions of, an investment manager so appointed.
13.07 Trustee: Number, Qualifications and Majority
Action.
(a) The Employer shall designate one or more Trustees
for each Trust. Any natural person and any corporation having
power under applicable law to act as a trustee of a pension or
profit sharing plan may be a Trustee. No person shall be
disqualified from being a Trustee by being employed by the
Employer, by being the Administrator, by being a trustee under
any other qualified retirement plan of the Employer or by being a
Participant in this Plan or such other qualified plan.
(b) A Trustee holding office as sole Trustee with
respect to a Trust hereunder shall have all the powers and duties
herein given to the Trustees hereunder. When the number of
Trustees with respect to a Trust is three, any two of them may
act, but the third Trustee shall be promptly informed of the
action. When there are two or more Trustees with respect to a
Trust, they may, by written instrument communicated to the
Employer and the Administrator, allocate among themselves the
powers and duties herein given to the Trustee hereunder. If such
an allocation is made, to the extent permitted by applicable law,
no Trustee shall be liable either individually or as a trustee
for loss to the Plan from the acts or omissions of another
Trustee with respect to duties allocated to such other Trustee.
13.08 Change of Trustee.
(a) Any Trustee may resign as Trustee upon notice in
writing to the Employer, and the Employer may remove any Trustee
upon notice in writing to each Trustee. The removal of a Trustee
shall be effective immediately, except that a corporation serving
as a Trustee shall be entitled to 60 days' notice which it may
waive, and the resignation of a Trustee shall be effective
immediately, provided that, if the Trustee is the sole Trustee,
neither a removal nor a resignation of a Trustee shall be
effective until a successor Trustee has been appointed and has
accepted the appointment. If within 60 days of the delivery of
the written resignation or removal of a sole Trustee, another
Trustee shall not have been appointed and have accepted, the
resigning or removed Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee or may
terminate the Plan pursuant to Section XVIII of the Prototype
Plan. The Trustee shall not be liable for the acts and omissions
of any successor Trustee.
(b) At any time when the number of Trustees is one or
two the Employer may but need not appoint, respectively two or
one additional Trustees. Such an appointment and the acceptance
thereof shall be in writing, and shall take effect upon the
delivery of written notice thereof to all the Trustees and the
Administrator and such acceptance by the appointed Trustee,
provided that if a corporation is a Trustee then in the absence
of its consent, such an appointment of an additional or successor
Trustee shall not become effective until 60 days after its
receipt of notice.
(c) Although any Employer adopting the Plan may choose
any Trustee who is willing to accept the Trust, the Distributor
or its successor may make or may have made tentative standard
arrangements with any bank or trust company with the expectation
it will be used as the Trustee by a substantial group of
Employers. It is also contemplated that more favorable results
can be obtained with a substantial volume of business, and that
it may become advisable to remove such bank or trust company as
Trustee and substitute another Trustee. Therefore, anything in
the prior two subsections notwithstanding, each Employer adopting
this Plan hereby agrees that the Distributor may, upon a date
specified in a notice of at least 30 days to the affected
Employer and in the absence of written objection by the Employer
received by the Distributor before such date, (i) remove any
Trustee and in that case, or if such a Trustee has resigned as to
a group of Employers, (ii) appoint a successor Trustee, provided
such action is taken with respect to all Employers similarly
circumstanced of which the Distributor has knowledge, and
provided such notice is given in writing and mailed postage
prepaid to the Employer at the latest address furnished to the
Distributor directly or supplied to it by such Trustee which is
to be succeeded. If within 60 days after a Trustee's resignation
or removal pursuant to this subsection (i), the Distributor has
not appointed a successor which has accepted such appointment the
resigning or removed Trustee may petition an appropriate court
for the appointment of its successor. The resigning or removed
Trustee shall not be liable for the acts and omissions of such
successor.
(d) Successor Trustees qualifying under this Section
shall have all rights and powers and all the duties and
obligations of original Trustees.
13.09 Valuation. Annually, on the Valuation Date, or
more frequently in the discretion of the Trustee, the assets of
each Trust shall be valued at fair market value and the accounts
of the Trust shall be proportionately adjusted to reflect income,
gains, losses or expenses, if the system of accounting does not
directly accomplish all such adjustments. Each account shall
share in income gains, losses, or expenses connected with an
asset in which it is invested according to the proportion which
the account's investment in the asset bears to the total amount
of the Trust Fund invested in the asset. Any dividends or
credits earned on insurance contracts shall be allocated to the
specific account of the Participant from which the funds
originated for investment in the contract.
The Trust Fund shall be administered separately from, and
shall not include any assets being administered under, any other
plan of an Employer. Interim valuations, if any, shall be
applied uniformly and in a non-discriminatory manner for all
Employees.
13.10 Registration. Any assets in the Trust Fund may be
registered in the name of the Trustee or any nominee designated
by the Trustee.
13.11 Certifications and Instructions.
(a) Any pertinent vote or resolution of the Board of
Directors of the Employer (if it is a corporation) shall be
certified to the Trustee over the signature of the Secretary or
an Assistant Secretary of the Employer and under its corporate
seal. The Employer shall promptly furnish to the Trustee
appropriate certification evidencing the appointment and
termination of the individual or individuals serving as
Administrator under Section 14.01 of the Plan.
(b) The Administrator shall furnish to the Trustee
appropriate certification of the individual or individuals
authorized to give notice on behalf of the Administrator and
providing specimens of their signatures. All requests,
directions, requisitions for money and instructions by the
Administrator to the Trustee shall be in writing and signed.
There may be standing requests, directions, requisitions or
instructions to the extent acceptable to the Trustee.
13.12 Accounts and Approval.
(a) The Trustee shall keep accurate and detailed
accounts of all investments, receipts and disbursements and other
transactions hereunder, and all books and records relating
thereto shall be open at all reasonable times to inspection and
audit by any person or persons designated by the Administrator or
by the Employer.
(b) Within 90 days following the close of each Plan
Year the Trustee may, and upon the request of the Employer or the
Administrator shall, file with the Administrator and the Employer
a written report setting forth all securities or other
investments (including insurance contracts) purchased and sold,
all receipts, disbursements and other transactions effected by it
during the period since the date covered by the next prior
report, and showing the securities and other property held at the
end of such period, and such other information about the Trust
Fund as the Administrator shall request. Unless the Employer or
Administrator, within 90 days from the date of mailing of such
report, objects to the contents of such report, the report shall
be deemed approved. Any such objections shall set forth the
specific grounds on which they are based.
13.13 Taxes. The Trustee may assume that any taxes
assessed on or in respect of the Trust Fund are lawfully assessed
unless the Administrator shall in writing advise the Trustee that
in the opinion of counsel for the Employer such taxes are not
lawfully assessed. In the event that the Administrator shall so
advise the Trustee, the Trustee, if so requested by the
Administrator and suitable provision for their indemnity having
been made, shall contest the validity of such taxes in any manner
deemed appropriate by the Administrator or counsel for the
Employer. The word "taxes" in this Article shall be deemed to
include any interest or penalties that may be levied or imposed
in respect to any taxes assessed. Any taxes, including transfer
taxes incurred in connection with the investment or reinvestment
of the assets of the Trust Fund that may be levied or assessed in
respect to such assets shall, if allocable to the Accounts of
specific Participants, be charged to such Accounts, and if not so
allocable, they shall be equitably apportioned among all such
Participants' Accounts.
13.14 Employment of Counsel. The Trustee may employ
legal counsel (who may be counsel for the Employer) and shall be
fully protected in acting or refraining from acting, upon such
counsel's advice in respect to any legal questions.
13.15 Compensation of Trustee. An individual Trustee
who is an Employee of the Employer shall not be compensated for
services as Trustee. A corporation, or an individual who is not
an Employee of the Employer, serving as a Trustee shall be
entitled to reasonable compensation for services; such
compensation shall be paid in accordance with Article XV.
13.16 Limitation of Trustee's Liability.
(a) The Trustee shall have no duty to take any action
other than as herein specified, unless the Administrator shall
furnish it with instructions in proper form and such instructions
shall have been specifically agreed to by it, or to defend or
engage in any suit unless it shall have first agreed in writing
to do so and shall have been fully indemnified to its
satisfaction.
(b) The Trustee may conclusively rely upon and shall
be protected in acting in good faith upon any written
representation or order from the Administrator or any other
notice, request, consent, certificate or other instrument or
paper believed by the Trustee to be genuine and properly
executed, or any instrument or paper if the Trustee believes the
signature thereon to be genuine.
(c) The Trustee shall not be liable for interest on
any reasonable cash balances maintained in the Trust.
(d) The Trustee shall not be obligated to, but may, in
its discretion, receive a contribution directly from a
Participant.
(e) The Employer shall indemnify and save harmless the
Trustee from and against any and all liability to which the
Trustee may be subjected by reason of any act, conduct or failure
to act (except willful misconduct or gross negligence) in its
capacity as Trustee, including all expenses reasonably incurred
in its defense.
13.17 Successor Trustee. Any corporation into which a
corporation acting as a Trustee hereunder may be merged or with
which it may be consolidated, or any corporation resulting from
any merger, reorganization or consolidation to which such Trustee
may be a party, shall be the successor of the Trustee hereunder,
without the necessity of any appointment or other action,
provided the Trustee does not resign and is not removed.
13.18 Enforcement of Provisions. To the extent
permitted by applicable law, the Employer and the Administrator
shall have the exclusive right to enforce any and all provisions
of this Agreement on behalf of all Employees or former Employees
of the Employer or their Beneficiaries or other persons having or
claiming to have an interest in the Trust Fund or under the
Plan. In any action or proceeding affecting the Trust Fund or
any property constituting a part or all thereof, or the
administration thereof or for instructions to the Trustee, the <PAGE>
Employer, the Administrator and the Trustee shall be the only
necessary parties and shall be solely entitled to any notice of
process in connection therewith; any judgment that may be entered
in such action or proceeding shall be binding and conclusive on
all persons having or claiming to have any interest in the Trust
Fund or under the Plan.
13.19 Voting. The Trustee shall deliver, or cause to be
executed and delivered, to the Administrator, or to such
individuals designated by the Administrator, all notices,
prospectuses, financial statements, proxies and proxy soliciting
materials received by the Trustee relating to securities held by
the Trust. The Administrator shall deliver these to the
individuals entitled to make investment decisions pursuant to
Section 13.02 hereof (if the Adoption Agreement so provides this
may be the Participant or a Beneficiary) to the extent that the
Administrator has decided to pass-through voting to such
individuals. Each individual, including the Administrator, with
voting rights, is hereby designated a "named fiduciary," within
the meaning of Section 402(a)(2) and 403(a)(1) of the Act, with
respect to the Accounts over which he or she may exercise voting
rights. With respect to proxies, proxy solicitation materials,
and other voting matters, the Trustee shall vote securities held
by the Trust in accordance with the written instructions (as
expressed in a properly completed and executed proxy) of the
Administrator or of the individuals entitled to make investment
decisions pursuant to Section 13.02 as expressed in a properly
completed and executed proxy. Such instructions shall be
delivered to the Trustee by the Administrator, or such person
designated by the Administrator. With respect to securities
issued by the Employer, voting instructions shall be delivered
directly to the Trustee by the individuals entitled to make
investment decisions with respect to such securities and the
Trustee shall maintain the confidentiality, and shall not
disclose the contents, of any such vote except as otherwise
required by law or a court of competent jurisdiction. The
Trustee and the Administrator may establish a procedure whereby
any votes relating to securities issued by the Employer are
delivered by the Administrator to the Trustee provided that the
contents of such votes are not made known to the Administrator.
If, however, the Trustee has not received instructions with
respect to how to vote given securities at least five full
business days (or such shorter period as the Trustee, in its
discretion, may determine) prior to the meeting at which such
securities are to be voted, the Trustee shall not vote such
securities unless otherwise required by law.
13.20 Applicability to Loan Trustee. Where appropriate,
the foregoing provisions of this Article shall apply to the Loan
Trustee on the same basis as if the Loan Trustee were the
Trustee.
13.21 Applicability to Other Trust. The provisions of
this Article XIII shall apply with respect to a separate trust
which is created hereby but shall not apply to a separate trust
created pursuant to a separate trust agreement.
ARTICLE XIV. ADMINISTRATION
14.01 Appointment of Administrator. From time to time,
the Employer may, by identifying such person(s) in writing to
both the Trustee and the Participants, appoint one or more
persons as Administrator (hereinafter referred to in the
singular). Such Administrator shall have all power and authority
necessary to carry out the terms of the Plan. A person appointed
as Administrator may also serve in any other fiduciary capacity,
including that of Trustee, with respect to the Plan. The
Administrator may resign upon 15 days' advance written notice to
the Employer, and the Employer may at any time revoke the
appointment of the Administrator with or without cause. The
Employer shall exercise the power and fulfill the duties of the
Administrator if at any time an Administrator has not been
properly appointed in accordance with this Section or the
position is otherwise vacant.
14.02 Named Fiduciaries. The "Named Fiduciaries" within
the meaning of the Act shall be the Administrator, each Trustee
and each Participant and Beneficiary with voting rights and/or
investment rights.
14.03 Allocation of Responsibilities. Responsibilities
under the Plan shall be allocated among the Trustee, the
Administrator and the Employer as follows:
(a) Trustee: The Trustee shall have exclusive
responsibility to hold, manage and invest, pursuant to
instructions communicated to it in accordance with Section 13.02
above, the funds received by it subject to the powers granted to
it under Article XIII hereof. Notwithstanding the preceding
sentence, to the extent that loans are made to Participants in
accordance with Article XII hereof, the Trustee shall not be
responsible for management of the portion of Trust assets subject
to such loans and the Loan Trustee shall be responsible for
administering such Trust assets in accordance with provisions of
Article XII.
(b) The Administrator: The Administrator shall have
the responsibility and authority to control the operation and
administration of the Plan in accordance with its terms
including, without limiting the generality of the foregoing, (i)
any investment decisions assigned to it under the Adoption
Agreement or the Plan or transmission to the Trustee of any
Participant investment decision under Section 13.02; (ii)
interpretation of the Plan, conclusive determination of all
questions of eligibility, status, benefits and rights under the
Plan and certification to the Trustee of all benefit payments
under the Plan; (iii) hiring of persons to provide necessary
services to the Plan not provided by Employees; (iv) preparation
and filing of all statements, returns and reports required to be
filed by the Plan with any agency of government; (v) compliance
with all disclosure requirements of all state or federal law;
(vi) maintenance and retention of all Plan records as required by
law, except those required to be maintained by the Trustee; and
(vii) all functions otherwise assigned to it under the terms of
the Plan.
(c) Employer: The Employer shall be responsible for
the design of the Plan, as adopted or amended, the designation of
the Administrator and each Trustee (and, if appropriate, the Loan
Trustee) as provided in the Plan, the delivery to the
Administrator and the Trustee of employee information necessary
for operation of the Plan (including, without limitation, dates
of birth, hire, and death; compensation amounts; and dates of
death of beneficiaries), the timely making of the Employer
Contributions pursuant to Articles IV and VII, and the exercise
of all functions provided in or necessary to the Plan except
those assigned in the Plan to other persons.
(d) This Section is intended to allocate individual
responsibility for the prudent execution of the functions
assigned to each of the Trustees, the Loan Trustee, the
Administrator and the Employer and none of such responsibilities
or any other responsibility shall be shared among them unless
specifically provided in the Plan. Whenever one such person is
required by the Plan to follow the directions of another, the two
shall not be deemed to share responsibility, but the person who
gives the direction shall be responsible for giving it and the
responsibility of the person receiving the direction shall be to
follow it insofar as it is on its face proper under applicable
law.
14.04 More Than One Administrator. If more than one
individual is appointed as Administrator, such individuals shall
either exercise the duties of the Administrator in concert,
acting by a majority vote or allocate such duties among
themselves by written agreement delivered to the Employer and the
Trustee. In such a case, the Trustee may rely upon the
instruction of any one of the individuals appointed as
Administrator regardless of the allocation of duties among them.
14.05 No Compensation. The Administrator shall not be
entitled to receive any compensation from the funds held under
the Plan for its services in that capacity unless so determined
by the Employer or required by law.
14.06 Record of Acts. The Administrator shall keep a
record of all its proceedings, acts and decisions, and all such
records and all instruments pertaining to Plan administration
shall be subject to inspection by the Employer at any time. The
Employer shall supply, and the Administrator may rely on the
accuracy of, all Employee data and other information needed to
administer the Plan.
14.07 Bond. The Administrator shall be required to give
bond for the faithful performance of its duties to the extent, if
any, required by the Act, the expense to be borne by the
Employer.
14.08 Agent for Service of Legal Process. The
Administrator shall be agent for service of legal process on the
Plan.
14.09 Rules. The Administrator may adopt or amend and
shall publish to the Employees such rules and forms for the
administration of the Plan, and may employ or retain such
attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of
the Plan as it deems necessary or advisable.
14.10 Delegation. To the extent permitted by applicable
law, the Administrator may delegate all or part of its
responsibilities hereunder and at any time revoke such
delegation, by written statement communicated to the delegate and
the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall
annually review the performance of all such delegates.
14.11 Claims Procedure. It is anticipated that the
Administrator will administer the Plan to provide Plan benefits
without waiting for them to be claimed, but the following
procedure is established to provide additional protection to
govern unless and until a different procedure is established by
the Administrator and published to the Participants and
Beneficiaries.
(a) Manner of Making Claim. A claim for benefits by a
Participant or Beneficiary to be effective under this procedure
must be made to the Administrator and must be in writing unless
the Administrator formally or by course of conduct waives such
requirements.
(b) Notice of Reason for Denial. If an effective
claim is wholly or partially denied, the Administrator shall
furnish such Participant or Beneficiary with written notice of
the denial within 60 days after the original claim was filed.
This notice of denial shall set forth in a manner calculated to
be understood by the claimant (i) the reason or reasons for
denial, (ii) specific reference to pertinent plan provisions on
which the denial is based, (iii) a description of any additional
information needed to perfect the claim and an explanation of why
such information is necessary, and (iv) an explanation of the
Plan's claims procedure.
(c) The Participant or Beneficiary shall have 60 days
from receipt of the denial notice in which to make written
application for review by the Administrator. The Participant or
Beneficiary may request that the review be in the nature of a
hearing. The Participant or Beneficiary shall have the rights
(i) to have representation, (ii) to review pertinent documents,
and (iii) to submit comments in writing.
(d) The Administrator shall issue a decision on such
review within 60 days after receipt of an application for review,
except that such period may be extended for a period of time not
to exceed an additional 60 days if the Administrator determines
that special circumstances (such as the need to hold a hearing)
requires such extension. The decision on review shall be in
writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant,
and specific references to the pertinent Plan provisions on which
the decision is based.
(e) The Employer shall indemnify and hold harmless the
Administrator, if the Administrator is not the Employer, and any
employees of the Employer who performs the function of the
Administrator for the Employer, if the Administrator is the
Employer, (collectively, an "Indemnitee"), from any and all
claims, loss, damages, expenses (including reasonable counsel
fees approved by the Employer) and liability (including any
reasonable amounts paid in settlement with the Employer's
approval), arising from any act or omission of such Indemnitee,
except when the same is judicially determined to be due to the
willful misconduct or gross negligence of such Indemnitee.
ARTICLE XV. FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or
Trustee incurred in the performance of their duties hereunder or
under the Trust may be paid by the Employer; and to the extent
not so paid by the Employer, said fees and expenses shall be
deemed to be an expense of the Trust and shall be charged against
the assets of the Trust, including any forfeitures that have not
been reallocated or applied to reduce Employer Contributions. In
addition, if the Plan permits Participant-directed investment of
Accounts, expenses that are allocable to the Accounts of specific
Participants shall be charged against the respective
Participants' Accounts in accordance with procedures adopted by
the Administrator from time to time.
ARTICLE XVI. BENEFIT RECIPIENT INCOMPETENT
OR DIFFICULT TO ASCERTAIN OR LOCATE
16.01 Incompetency. If any portion of the Trust Fund
becomes distributable to a minor or to a Participant or
Beneficiary who, as determined in the sole discretion of the
Administrator, is physically or mentally incapable of handling
his or her financial affairs, the Administrator may direct the
Trustee to make such distribution either to the legal
representative or custodian of the incompetent or to apply such
distribution directly for the incompetent's support and
maintenance. Payments which are made in good faith shall
completely discharge the Employer, Administrator and Trustee from
liability therefor.
16.02 Difficulty to Ascertain or Locate. If it is
impossible or difficult to ascertain or locate the person who is
entitled to receive any benefit under the Plan, the Administrator
in its discretion may direct that such benefit (a) be retained in
the Trust, (b) be paid to a court pending judicial determination
of the right thereto, or (c) be forfeited and reallocated
pursuant to the provisions of Section 8.02(a)(i) or (ii) above,
as the case may be, provided that as a result the Employer shall
incur an obligation to restore the individual's Account balance
or otherwise pay the individual his or her benefit if the
individual is subsequently ascertained or located.
ARTICLE XVII. DESIGNATION OF BENEFICIARY
Each Participant and Beneficiary may submit a properly
executed Designation of Beneficiary to the person designated
under this Article XVII to keep such records. In order to be
effective, such designation must have been properly executed and
submitted to the appropriate person before the death of the
Participant or Beneficiary, as the case may be; and, for a
Participant who is survived by his or her Spouse, unless the
Participant leaves 100% of his or her benefit to such Spouse,
must be accompanied, or preceded, by the consent of such Spouse.
Such consent of the Spouse must (a) be in writing;
(b) acknowledge that the effect of such consent is that the
Spouse may receive no benefits under the Plan; (y) be witnessed
by a Plan representative or a notary public; and (c) be either
(i) a limited consent to the payment of death benefits to a
specific person or persons or (ii) expressly permit the
Participant to designate another person or other persons without
obtaining further consent of the Spouse. The last effective
Designation accepted by the appropriate person shall be
controlling, and whether or not fully dispositive of the
Participant's Account, thereupon shall revoke all Designations
previously submitted by the Participant or Beneficiary, as the
case may be. If a Participant's Beneficiary(ies) predeceases the
Participant, the remaining living Beneficiary(ies) shall receive
their proportionate share of the Participant's Account as if such
deceased Beneficiary(ies) had never been designated. Similar
rules shall apply with respect to contingent Beneficiaries. Each
such executed Designation is hereby specifically incorporated
herein by reference and shall be construed and enforced in
accordance with the laws of the state in which the Trustee has
its principal place of business. The Administrator shall be the
person responsible for accepting and safekeeping Designation of
Beneficiary Forms unless the Trustee agrees in writing to accept
and safekeep such forms.
ARTICLE XVIII. SPENDTHRIFT PROVISION AND DISTRIBUTIONS
PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS
18.01 General Spendthrift Rule. No interest of any
Participant or Beneficiary shall be assigned, anticipated or
alienated in any manner nor shall it be subject to attachment, to
bankruptcy proceedings or to any other legal process or to the
interference or control of creditors or others, except (a) to the
extent that Participants may secure loans from the Trust with
their Accounts pursuant to Article XII hereof and (b) pursuant to
Section 18.02 hereof.
18.02 Account Division and Distribution Pursuant to
Qualified Domestic Relations Orders. A Participant's vested
Account may be assigned pursuant to a qualified domestic
relations order as defined in Code Section 414(p). If, and to
the extent that, any portion of a Participant's vested Account is
payable to an alternate payee pursuant to a qualified domestic
relations order within the meaning of Sections 401(a)(13)(B) and
414(p) of the Code, the provisions of said order shall govern the
payment thereof. An order shall not fail to constitute a
qualified domestic relations order within the meaning of Sections
401(a)(13)(B) and 414(p) of the Code if the order provides for a
payment to be made to an alternate payee prior to the time the
Participant would be entitled to receive a benefit payment
hereunder. The Administrator shall be responsible for
determining whether an order constitutes a qualified domestic
relations order.
ARTICLE XIX. NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall
qualify under Code Section 401(a) as that Section exists at the
time the Plan is established. If the Plan as adopted by the
Employer fails to attain such qualification, the Plan will no
longer participate in the relevant sponsor's prototype 401(k)
plan and will be considered an individually designed plan. If
the Plan as adopted by the Employer fails to attain or retain
such qualification, the Employer shall promptly either amend the
Plan under Code Section 401(b) so that it does qualify, or direct
the Trustee to terminate the Trust, and distribute all the assets
of the Trust equitably among the contributors thereto in
proportion to their contributions, and the Plan and Trust shall
be considered to be rescinded and of no force and effect.
ARTICLE XX. AMENDMENT AND TERMINATION
20.01 Amendment or Termination by the Employer. The
Employer by action of the Board of Directors, other governing
board, general partner or sole proprietor, as the case may be,
may at any time, and from time to time amend this Prototype Plan
and the Adoption Agreement (including a change in any election it
has made in the Adoption Agreement), or suspend or terminate this
Plan by giving written notice to the Trustee, but the Trust may
not thereby be diverted from the exclusive benefit of the
Participants, their Beneficiaries, survivors or estates, or the
administrative expenses of the Plan, nor revert to the Employer,
nor may an allocation or contribution theretofore made be changed
thereby, nor may any amendment directly or indirectly deprive a
Participant of such Participant's nonforfeitable rights to
benefits accrued to the date of the amendment.
No amendment to the Plan shall be effective to the extent
that it would have the effect of decreasing a Participant's
Account balance or eliminating an optional form of distribution.
Notwithstanding the preceding sentence, a Participant's Account
balance may be reduced to the extent permitted under Code Section
412(c)(8). Furthermore, if the vesting schedule of the Plan is
amended, in the case of an Employee who is a Participant as of
the later of the date such amendment is adopted or the date it
becomes effective, the nonforfeitable percentage (determined as
of such date) of such Employee's right to his Employer-derived
Account balance will not be less than his percentage computed
under the Plan without regard to such amendment.
The Employer may (a) change the choice of options in the
Adoption Agreement, (b) add overriding language in the Adoption
Agreement when such language is necessary to satisfy the
requirements of Code Section 415 or to avoid duplication of
minimum benefits or accruals under Code Section 416 because of
the required aggregation of multiple plans, or (c) adopt a model
amendment published by the Internal Revenue Service which
specifically provides that the adoption of such a model amendment
will not cause the Plan to be treated as an individually designed
plan. Any other amendment by the Employer will constitute a
substitution by the Employer of an individually designed plan for
the sponsor's prototype plan. After such an amendment, the Plan
shall no longer participate in the sponsor's prototype plan and
the general amendment procedure of the Internal Revenue Service
governing individually designed plans will be applicable.
If an amendment changing the vesting schedule is executed
(including execution of this Adoption Agreement as an amendment
to an existing plan), Participants with three or more Vesting
Years (five or more Vesting Years for Participants who have not
been credited with an Hour of Service in a Plan Year beginning
after December 31, 1988) before the expiration of the election
period described in the next sentence shall have the right to
elect the vesting schedule in effect on the day before the
election period. The election period shall commence on the date
the amendment is adopted and end on the latest of (x) 60 days
after the amendment is adopted, (y) 60 days after the Effective
Date, or (z) 60 days after the Participant is issued written
notice of the amendment by the Administrator. Failure to so
elect shall be treated as a rejection and such election or
rejection shall be final.
Nothing contained herein shall constitute an agreement or
representation by any Sponsor or the Distributor that it will
continue to maintain its sponsorship of the Plan indefinitely.
20.02 Delegation. The Employer hereby delegates to the
Sponsor the authority to amend so much of the Adoption Agreement
and this Prototype 401(k) Plan as is in prototype form and, to
the extent to which the Employer could effect such amendment, the
Employer shall be deemed to have consented to any amendment so
made. When an election within the prototype form has been made
by the Employer, it shall be deemed to continue after amendment
of the prototype form unless and until the Employer expressly
further amends the election, notwithstanding that the provision
for the election in the amended prototype form is in a different
form or place; provided, however, that if the amended form
inadvertently fails to provide means to duplicate exactly the
earlier election, such earlier election shall continue until such
further amendment. The immediately preceding sentence is subject
to the qualification that each Employer hereby delegates to the
Sponsor, in the event of such an amendment of the prototype form,
authority to determine conclusively that such a continuation of
an earlier election by the Employer is not advisable and to make
the election for the Employer in the amended prototype form which
in the judgment of the Sponsor most nearly corresponds with the
election made by the Employer before the amendment of the
prototype form, provided the following procedure is followed:
the election for the Employer may be made with respect to any
specified Employers as to whom it may be made applicable singly,
or such election may be made with respect to all Employers as to
whom it may be made applicable as a group; and the election shall
be made as of an effective date which has been specified in a
notice mailed or delivered, at the last address(es) of the
Employer(s) on the records of the Distributor, to the Employer(s)
at least 20 days before the end of the remedial amendment period.
Such notice may be mailed to Employers to whom it cannot be
applicable by reason of a previous election made by the Employer
or otherwise, but it shall be effective only as to those
Employers who have received the notice and have not themselves
made a new election with respect to that item since the amendment
of the prototype form and previous to the effective date of such
election by the Sponsor. In the case of a mass submitter plan,
the Sponsor delegates its authority to make elections, or to make
amendments, to the mass submitter who shall make such elections
or amendments on behalf of the Sponsor and the Sponsor shall be
deemed to have consented to any such election or amendment so
made. The foregoing delegations of authority to make elections,
or to make amendments, shall not impose any duty on the Sponsor
or, if applicable, the mass submitter to make a given election or
amendment and shall not affect the interpretation of the Plan if
any so delegated authority is not used.
20.03 Distribution of Accounts Upon Termination. Upon
termination or partial termination of the Plan or complete
discontinuance of Employer Contributions under it, the rights of
all Participants (or, in the case of a partial termination, the
Participants affected thereby) to amounts theretofore credited to
their Accounts under the Plan shall be fully vested and
nonforfeitable. Upon any such termination or discontinuance, the
Administrator shall determine whether to pay the interests of
Participants, and Beneficiaries immediately, to retain such
interest in the Trust and pay them in the future according to
Articles IX and X (or Article XXIV, if applicable) or to use what
other methods the Administrator deems advisable in order to
furnish whatever benefits the Trust will provide; provided any
such distributions pursuant to this Section shall comply with the
requirements of Articles IX or X (or Article XXIV, if applicable)
hereof.
ARTICLE XXI. TRANSFERS
Nothing contained herein shall prevent the merger or
consolidation of the Plan with, or transfer of assets or
liabilities of the Plan to, another plan meeting the requirements
of Code Section 401(a) or the transfer to the Plan of assets or
liabilities of another such plan so qualified under the Code.
Any such merger, consolidation or transfer shall be accompanied
by the transfer of such existing records and information as may
be necessary to properly allocate such assets among Participants,
including any tax or other information necessary for the
Participants or persons administering the plan which is receiving
the assets. The terms of such merger, consolidation or transfer
must be such that if this Plan is then terminated, the
requirements of Section 20.01 hereof would be satisfied and each
Participant would receive a benefit immediately after the merger,
consolidation or transfer equal to or greater than the benefit he
or she would have received if the Plan had terminated immediately
before the merger, consolidation or transfer. If this Plan is a
transferee plan with respect to all or a portion of a
Participant's Account, the optional forms of distribution
described in Article X shall include any optional form of
distribution which the Participant could have elected under the
transferor plan and which would otherwise comply with the
provisions of this Plan.
ARTICLE XXII. OWNER-EMPLOYEE PROVISIONS
22.01 Purpose of Section. This Section is intended to
insure that the Plan complies with Code Section 401(d). Any
ambiguity herein will be construed to that end, and this Article
will override any other provision of the Plan with which it may
be inconsistent.
22.02 Control. For purposes of this Article, "Control"
means the ownership directly or indirectly of the entire interest
in an unincorporated trade or business or more than 50% of either
the capital interest or the profits interest in a partnership.
For the purposes of applying the preceding sentence, an
Owner-Employee, or two or more Owner-Employees shall be treated
as owning any interest in a partnership which is owned, directly
or indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to Control.
22.03 Limitations. No benefits shall be provided to an
Owner-Employee under this Plan unless:
(a) if an Owner-Employee or group of Owner-Employees
Controls the trade or business covered by this Plan and also
Control as an Owner-Employee or Owner-Employees one or more other
trades or businesses, this Plan and the plans established for
such other trades or businesses, when taken together, form a
single plan which satisfies the requirements of Code Sections
401(a) and (d) with respect to the employees of all the
controlled trades or businesses;
(b) if an Owner-Employee or group of Owner-Employees
Controls another trade or business but does not Control the trade
or business covered by this Plan, the employees of such other
trades or businesses are included in a plan which satisfies the
requirements of Sections 401(a) and (d) of the Code and which
provides contributions and benefits for such employees which are
not less favorable than those provided for Owner-Employees under
this Plan; and
(c) if an Owner-Employee is covered under the
qualified retirement plans of two or more trades or businesses
which he or she does not Control and the Owner-Employee Controls
a trade or business, contributions or benefits for the employees
under the plan of the trade or business which the Owner-Employee
Controls are not less favorable than those provided for the
Owner-Employee in the most favorable qualified retirement plan of
the trade(s) or business(es) which the Owner-Employee does not
Control.
ARTICLE XXIII. TOP-HEAVY PROVISIONS
23.01 Purpose of Section. This Article is intended to
insure that the Plan complies with Code Section 416. If the Plan
is or becomes Top-Heavy in any Plan Year, the provisions of this
Section will supersede any conflicting provision in the Plan.
23.02 Definitions. The terms used in this Section shall
have the following meanings:
(a) Key Employee: Any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time during
the determination period was (i) an officer of the Employer
having an annual compensation greater than 50% of the amount in
effect under Code Section 415(b)(1)(A) for the Plan Year (subject
to the limitation that no more than the lesser of (A) 50
Employees or (B) the greater of 3 Employees or 10% of the
Employees shall be deemed to be officers), (ii) an owner (or
considered an owner under Code Section 318) of 1 of the 10
largest interests in the Employer if both such individual was an
owner of more than a .5% interest in the Employer (aggregated
with the Employer for this purpose are all members of (A) a
controlled group of corporations (as defined in Code Section
414(b) as modified by Code Section 415(h)), (B) commonly
controlled trades or businesses (whether or not incorporated) (as
defined in Code Section 414(c) as modified by Code Section
415(h)), or (C) affiliated service groups (as defined in Code
Section 414(m)) of which the Employer is a part) and such
individual's compensation exceeds the dollar limitation under
Code Section 415(c)(1)(A), (iii) a 5% owner of the Employer, or
(iv) a 1-percent owner of the Employer who has an annual
compensation of more than $150,000. The determination period is
the Plan Year containing the Determination Date and the 4
preceding Plan Years. The determination of who is a Key Employee
will be made in accordance with Code Section 416(i)(1) and the
regulations thereunder.
(b) Top-Heavy Plan. This Plan is Top-Heavy if any of
the following conditions exist:
(i) If the Top-Heavy Ratio for this Plan exceeds
60% and this Plan is not part of any Required Aggregation Group
or Permissive Aggregation Group of plans.
(ii) If this Plan is a part of a Required
Aggregation Group of plans but not part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the Required
Aggregation Group of plans exceeds 60%.
(iii) If this Plan is a part of a Required
Aggregation Group and part of a Permissive Aggregation Group of
plans and the Top-Heavy Ratio for the Permissive Aggregation
Group exceeds 60%.
(c) Top-Heavy Ratio.
(i) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension
Plan within the meaning of Code Section 408(k)) and the Employer
has not maintained any defined benefit plan which during the
five-year period ending on the Determination Date(s) has or has
had accrued benefits, Top-Heavy Ratio for this Plan alone or for
the Required Aggregation Group or Permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which is the sum
of the account balances under all of the plans as of the
Determination Date(s) (including any part of any account balance
distributed in the five-year period ending on the Determination
Date(s)) of all Key Employees who have received compensation from
the Employer (other than benefits under a qualified retirement
plan) at any time during the five-year period ending on the
Determination Date(s), and the denominator of which is the sum of
all account balances as of the Determination Date(s) (including
any part of any account balance distributed in the five-year
period ending on the Determination Date(s)), of all Participants
who have received compensation from the Employer (other than
benefits under a qualified retirement plan) at any time during
the five-year period ending on the Determination Date(s). Both
the numerator and denominator of the fraction shall be computed
in accordance with Code Section 416 and the Treasury Regulations
promulgated thereunder. In addition, both the numerator and
denominator of the Top-Heavy Ratio shall be increased to reflect
any contribution which is not actually made as of the
Determination Date(s), but which is required to be taken into
account on that date under Code Section 416 and the Treasury
Regulations promulgated thereunder.
(ii) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension
Plan within the meaning of Code Section 408(k)) and the Employer
maintains or has maintained one or more defined benefit plans
which during the five-year period ending on the Determination
Date(s) has or has had accrued benefits, the Top-Heavy Ratio for
any Required Aggregation Group or Permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which is the sum
of (A) account balances under the defined contribution plans as
of the Determination Date(s) (including any part of any account
balance distributed in the five-year period ending on the
Determination Date(s)) of all Key Employees who have received
compensation from the Employer (other than benefits under a
qualified retirement plan) at any time during the five-year
period ending on the Determination Date(s) and (B) the present
value of accrued benefits under the defined benefit plans for all
Key Employees, who have received compensation from the Employer
(other than benefits under a qualified retirement plan) at any
time during the five-year period ending on the Determination
Date(s) and the denominator of which is the sum of (A) the
account balances under the defined contribution plans as of the
Determination Date(s) (including any part of any account balance
distributed in the five-year period ending on the Determination
Date(s)) of all participants who have received compensation from
the Employer (other than benefits under this Plan) at any time
during the five-year period ending on the Determination Date(s)
and (B) the present value of accrued benefits under the defined
benefit plans for all participants who have received compensation
from the Employer (other than benefits under this Plan) at any
time during the five-year period ending on the Determination
Date(s). Both the numerator and denominator of the fraction
shall be computed in accordance with Code Section 416 and
Treasury Regulations promulgated thereunder. In addition, both
the numerator and denominator of the Top-Heavy Ratio shall be
increased for aggregate distribution(s) of an account balance or
an accrued benefit made during the five-year period ending on the
Determination Date(s) and any contribution to a defined
contribution plan not actually made as of the Determination
Date(s), but which is required to be taken into account on that
date under Code Section 416 and the Treasury Regulations
promulgated thereunder.
(iii) For purposes of (i) and (ii) above, the
value of account balances and the present value of accrued
benefits will be determined as of the most recent Valuation Date
that falls within, or ends with, the 12-month period ending on
the Determination Date, except as provided in Code Section 416
and the Treasury Regulations promulgated thereunder for the first
and second plan years of a defined benefit plan. The account
balances and accrued benefits of a Participant who has not been
credited with at least one Hour of Service at any time during the
five-year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, and transfers are taken
into account will be made in accordance with Code Section 416 and
the Treasury Regulations promulgated thereunder. Deductible
employee contributions under any qualified plan maintained by the
Employer will not be taken into account for purposes of computing
the Top-Heavy Ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference
to the Determination Dates that fall within the same calendar
year.
For Plan Years commencing after December 31, 1986 for the
purpose of determining the Top-Heavy Ratio, if any target benefit
or defined benefit plan is included in the Required Aggregation
Group, the accrued benefit of an Employee other than a Key
Employee shall be determined under the method that uniformly
applies for accrual purposes under all qualified retirement plans
maintained by the Employer, or if there is no such method, as if
such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional accrual rate of Code Section
411(b)(1)(C).
(d) Permissive Aggregation Group. The Required
Aggregation Group of plans plus any other plan or plans of the
Employer which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of
Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group. (i) Each qualified
plan of the Employer in which at least one Key Employee
participates or participated at any time during the determination
period (regardless of whether the plan has terminated), and (ii)
any other qualified plan of the Employer which enables a plan
described in (i) to meet the requirements of Code Sections
401(a)(4) or 410.
(f) Determination Date. For any Plan Year subsequent
to the first Plan Year, the Determination Date shall be the last
day of the preceding Plan Year. For the first Plan Year of the
Plan, the Determination Date shall be the last day of that year.
(g) Valuation Date. Shall be the last day of the Plan
Year.
(h) Present Value. Present Value shall be based only
on the interest rate and the mortality table specified by the
Employer in the Adoption Agreement.
23.03 Minimum Allocation.
(a) In any Plan Year in which this Plan is Top-Heavy,
except as otherwise provided in subsections (c) and (d) below,
the Employer Contributions and forfeitures allocated, or during a
Plan Year which begins after December 31, 1988, Employer Profit
Sharing Contributions and forfeitures allocated to the
Participant's Employer Profit Sharing Contribution Account, on
behalf of any Participant who is not a Key Employee shall not be
less than the lesser of 3% of such Participant's Compensation or,
in the case where the Employer has no defined benefit plan which
designates this Plan to satisfy Code Section 401, the largest
percentage of Employer Contributions and forfeitures stated as a
percentage of a Key Employee's Compensation, allocated on behalf
of any Key Employee for that Plan Year. The minimum allocation
is determined without regard to any Social Security contribution
by the Employer. Salary Reduction Contributions, Employer
Matching Contributions and Qualified Matching Contributions may
not be taken into account to satisfy this minimum allocation.
This minimum allocation shall be made even though, under other
provisions of this Plan, the Participant would not otherwise be
entitled to receive an allocation, or would have received a
lesser allocation for the year because (i) the Participant failed
to complete the minimum number of Hours of Service specified in
the Adoption Agreement for receiving an allocation, (ii) the
Participant's Compensation was less than a stated amount, or
(iii) the Participant made insufficient mandatory contributions
to receive an Employer Matching Contribution.
(b) For purposes of computing the minimum allocation,
"Compensation" shall have the same meaning as in Section 5.05(b)
hereof.
(c) The provision in subsection (a) above shall not
apply to any Participant who was not employed by the Employer on
the last day of the Plan Year.
(d) The provision in subsection (a) above shall not
apply to any Participant to the extent the Participant is covered
under any other plan or plans of the Employer, and the Employer
has provided in the Adoption Agreement that the minimum
allocation or benefit requirement applicable to Top-Heavy Plans
will be met in such other plan or plans.
23.04 Nonforfeitability of Minimum Allocation. The
minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited
under Code Section 411(a)(3)(B) or 411(a)(3)(D).
23.05 Limitation on Compensation. For Plan Years
beginning after January 1, 1994, only the first $150,000 (or such
other amount as may be prescribed by the Secretary of the
Treasury or his or her delegate) of a Participant's Compensation
for the Plan Year shall be taken into account for purposes of
allocating Employer Contributions under this Article XXIII.
23.06 Minimum Vesting Schedule. Unless the Employer has
specified a more rapid vesting schedule in the Adoption
Agreement, for any Plan Year in which this Plan is Top-Heavy, the
following minimum vesting schedule shall apply:
<TABLE>
<CAPTION>
Nonforfeitable Percentage of
Employer Profit Sharing and
Vesting Years Matching Contribution Accounts
<S> <C>
1 0%
2 20
3 40
4 60
5 80
6 or more 100
</TABLE>
The minimum vesting schedule applies to all benefits within the
meaning of Code Section 411(a)(7) attributable to Employer
Contributions and forfeitures, including benefits accrued before
the effective date of Code Section 416 and benefits accrued
before the Plan became Top-Heavy. Further, no reduction in a
Participant's nonforfeitable percentage may occur in the event
the Plan's status as Top-Heavy changes for any Plan Year. If
conversion of the Plan into a Top-Heavy Plan has resulted in a
change of the Plan's vesting schedule to the minimum vesting
schedule discussed above, the change shall be treated as an
amendment to the Plan and the election referred to in
Section 20.01 hereof shall apply.
This Section does not apply to the Employer Profit Sharing
Contribution Account and Employer Matching Contribution Account
balances of any Participant who does not have an Hour of Service
after the Plan has initially become Top-Heavy and such
Participant's vested Employer Profit Sharing Contribution Account
and Employer Matching Contribution Account balance will be
determined without regard to this Section.
23.07 Effect on Code Section 415 Limitations.
Notwithstanding anything to the contrary in Article V above, the
following provisions apply if the Plan is Top-Heavy:
(a) In any Plan Year in which the Top-Heavy Ratio
exceeds 90% (and the Plan therefore becomes super Top-Heavy) the
denominators of the Defined Benefit Fraction (as defined in
Section 5.05(c) above) and the Defined Contribution Fraction (as
defined in Section 5.05(d) above) shall be computed using 100% of
the dollar limitation stated therein instead of 125%.
(b) In any Plan Year in which the Top-Heavy Ratio
exceeds 60%, but is less than 90%, the denominators of the
Defined Benefit Fraction (as defined in Section 5.05(c) above)
and the Defined Contribution Fraction (as defined in
Section 5.05(e) above) shall be computed using 100% of the dollar
limitation described therein instead of 125%, unless the Employer
has specified in the Adoption Agreement that the minimum
allocation provisions of Section 23.03 above shall be computed
using 4% of a Participant's Compensation, in which case the
dollar limitations of the Defined Benefit Fraction (as defined in
Section 5.05(c) above) and the Defined Contribution Fraction (as
defined in Section 5.05(e) above) shall continue to be computed
using 125% of the dollar limitations.
23.08 Termination of Top-Heavy Status. If the Plan
ceases to be Top-Heavy for any Plan Year and if the Employer has
not specified otherwise in the Adoption Agreement, the minimum
vesting schedule described in Section 23.06 shall continue to
apply. If the Employer has specified in the Adoption Agreement
that, upon conversion of the Plan to non-Top-Heavy status,
Participants' vested benefits are to be determined according to a
schedule other than the minimum vesting schedule described in
Section 23.06 hereof, such change in vesting schedules shall be
treated as an amendment, and the election referred to in Section
20.01 hereof shall apply.
ARTICLE XXIV. SPECIAL DISTRIBUTION RULES
24.01 Special Distribution Rules for Certain
Participants. If (a) it is determined that this Plan is a direct
or indirect transferee (where such transfer occurred after
December 31, 1984) of a defined benefit plan, money purchase
pension plan (including a target benefit plan), stock bonus or
profit sharing plan which would otherwise provide a life annuity
form of payment with respect to a Participant (including a plan
which was amended into this Plan), (b) the Plan is amended so as
to allow a Participant to elect to receive his or her benefits in
the form of a life annuity and a Participant elects to receive
his or her benefits in such form, (c) the Plan is amended to
provide that absent a Qualified Election of a Participant's
surviving Spouse, someone other than the Participant's surviving
Spouse becomes entitled to the Participant's vested Account
balance, or (d) if someone other than the Participant's surviving
Spouse is the beneficiary of any insurance purchased with funds
from the Participant's Account, then the provisions of Sections
24.03 to 24.05 below shall apply in lieu of Article IX above and
Sections 10.01 and 10.02 above. The Administrator shall specify
in writing to the Trustee the Participants' Accounts (or frozen
amounts in such Accounts) to which the provisions of Section
24.03 to 24.05 shall apply.
For the purposes of determining whether the provisions of
this Article apply, the Trustee shall be entitled to rely
conclusively on written instructions, if any, received by the
Trustee from the Administrator concurrent with the transfer.
Furthermore, where the transfer is, or was, not accompanied by
written instructions specifying conditions under which specific
provisions of this Article would apply, the Trustee shall be
entitled to conclusively presume that this Article does not
apply.
24.02 Definitions. For the purpose of this Section, the
following terms shall have the specified meanings:
(a) "Election Period" shall mean the period which
begins on the first day of the Plan Year in which the Participant
attains age 35 and which ends on the date of the Participant's
death. If a Participant separates from Service prior to the
first day of the Plan Year in which he or she attains age 35, the
Election Period with respect to his or her Vested Account Balance
(as of his or her date of separation) shall begin on his or her
date of separation.
(b) "Qualified Election" shall mean a valid waiver of
a Qualified Joint and Survivor Annuity or Qualified Preretirement
Survivor Annuity, as the case may be. To be valid, the waiver
must be in writing and Participant's Spouse must consent to it in
writing. The Spouse's consent to the waiver (i) must be
witnessed by a Plan representative or notary public and (ii) must
be (A) a general consent to the provision of a form (or forms) of
distribution to any alternative person (or alternative persons);
(B) a limited consent to the provision of a specific form (or
specific forms) of distribution to a specific alternate person
(or specific alternate persons); or (iii) a limited consent which
is specific with respect to form or alternative payee.
Notwithstanding the foregoing consent requirement, if the
Participant establishes to the satisfaction of a Plan
representative that such written consent may not be obtained
because there is no Spouse or the Spouse cannot be located, a
waiver will nonetheless be deemed a Qualified Election. Any
consent necessary for a Qualified Election will be valid only
with respect to the Spouse who signs the consent, or in the event
of a deemed Qualified Election, the Spouse whose consent could
not be obtained or who could not be located. Additionally, a
revocation of a prior waiver may be made by a Participant without
the consent of the Spouse at any time before the commencement of
distributions or benefits. The number of revocations shall be
unlimited. Each such revocation shall once again make the
Qualified Joint and Survivor Annuity or Qualified Preretirement
Survivor Annuity applicable, as the case may be. No consent
obtained pursuant to this Section shall be valid unless the
Participant has received the relevant notice as provided in
Sections 24.09 and 24.10.
(c) "Qualified Joint and Survivor Annuity" shall mean,
in the case of a married Participant, an annuity which can be
purchased with the Participant's Vested Account Balance for the
life of the Participant with a survivor annuity for the life of
the Spouse equal to 50% of the amount of the annuity which is
payable during the joint lives of the Participant and the Spouse.
In the case of an unmarried Participant, Qualified Joint and
Survivor Annuity shall mean an annuity which can be purchased
with a Participant's Vested Account Balance for the life of the
Participant.
(d) "Special Qualified Election" shall mean a valid
waiver of a Qualified Preretirement Survivor Annuity for the
period beginning on the date of such election and ending on the
first day of the Plan Year in which the Participant attains
age 35. To be valid, the waiver must be (i) in writing,
(ii) made prior to the first day of the Plan Year in which the
Participant attains age 35, and (iii) preceded by a written
explanation to the Participant of the Qualified Preretirement
Survivor Annuity in such terms as are comparable to the
explanation required by Section 24.09 and 24.10. Any election
made pursuant to this Section shall be void as of the first day
of the Plan Year in which the Participant attains age 35 and
Qualified Preretirement Survivor Annuity coverage shall be
automatically reinstated as of such date. Any future election to
waive the Qualified Preretirement Survivor Annuity must be a
Qualified Election.
(e) "Vested Account Balance" shall mean the
Participant's vested portion of his or her Account consisting of
the sum of the balances of Participant's Nondeductible Voluntary
Contributions Account, Deductible Voluntary Contribution Account,
Rollover Account, Salary Reduction Contributions Account,
Deferred Cash Contribution Account and Nonelective Contribution
Account and the vested portions of a Participant's Employer
Profit Sharing Account and Employer Matching Account, reduced by
any loans outstanding on the Annuity Starting Date which are
secured by the Participant's Account balance.
24.03 Distributions upon Death.
(a) Qualified Preretirement Survivor Annuity.
(i) Unless either paragraph (ii) below applies or
the Participant has selected an optional form of distribution
within the Election Period pursuant to a Qualified Election or a
Special Qualified Election, if the Participant dies before the
earlier of (A) his or her Annuity Starting Date or (B) his or her
First Required Distribution Date, then the Trustee shall, upon
the direction of the Administrator, apply 50% of the
Participant's Vested Account Balance toward the purchase of an
annuity contract for the life of the Spouse.
(ii) Notwithstanding the provisions of
paragraph (i) above, prior to the earlier of (A) Spouse's Annuity
Starting Date or (B) the Spouse's First Required Distribution
Year, the Spouse of a Participant may deliver a written election
to the Administrator whereby the Spouse elects not to have 50% of
the Participant's Vested Account Balance applied toward the
purchase of an annuity contract for the Spouse's life.
Similarly, after the earlier of (A) the Spouse's Annuity Starting
Date or (B) the Spouse's First Required Distribution Year, the
Spouse may deliver a written election to the Administrator
whereby the Spouse elects to terminate distributions pursuant to
the Qualified Preretirement Survivor Annuity and to receive the
liquidated value of the remainder of the Qualified Preretirement
Survivor Annuity in an alternative form. In the case where a
Spouse makes either of such elections, the portion of the
deceased Participant's Vested Account Balance which would
otherwise have been distributed pursuant to this subsection shall
be distributed pursuant to the provisions of subsection (b)
below.
(iii) In the case of a Spouse of a deceased
Participant who is scheduled to receive a Qualified Preretirement
Survivor Annuity and who does not otherwise elect, at the
instruction of the Administrator, the Trustee shall apply 50% of
the deceased Participant's Vested Account Balance toward an
annuity under which payments begin as of the later of the
Participant's separation from Service or (what would have been)
the Participant's Normal Retirement Date. A Spouse of a deceased
Participant may elect a commencement date which is earlier than
the date discussed in the previous sentence by filing a written
election to that effect with the Administrator; the Trustee shall
begin to make payments on such earlier date upon instruction from
the Administrator.
(b) Other Distributions at Death. If the Participant
dies after he or she has begun to receive distributions pursuant
to Section 24.04 below, this subsection shall apply with respect
to the Participant's entire Vested Account Balance. With respect
to any Vested Account Balance, or portion thereof, to which
subsection (a) did not apply, the provisions of Article IX shall
govern the distribution thereof.
24.04 Timing of Annuity Payments and Normal
Distributions. Payment of benefits under the Qualified Joint and
Survivor Annuity or distributions pursuant to the normal form of
distribution discussed in Section 24.05(b) below shall commence
within 60 days after the close of the Plan Year during which
occurs the later of (a) the Participant's Normal Retirement Date
or (b) the earlier of (i) the Participant's separation from
Service or (ii) the end of his or her First Required Distribution
Year. Payment of benefits may, at the discretion of the Trustee,
be paid directly to the Participant or to the Administrator, as
payee agent. If the Participant's vested Account balance
(exclusive of his or her Rollover Account and Deductible
Voluntary Contribution Account) is greater than $3,500, written
consent of the Participant is required for any earlier
distribution. A Participant may file an election with the
Administrator to request that distributions commence in
accordance with one of the following options provided that the
distribution shall otherwise comply with the requirements of the
Plan (including, but not limited to, Section 10.03):
(A) Distributions commencing before the Participant's
Normal Retirement Date if the Participant is Disabled or
experiences a separation from Service.
(B) Distributions commencing after the normal time of
distribution described above; provided, however, that any such
deferred distribution must commence no later than 60 days after
the end of the Participant's First Required Distribution Year.
24.05 Form of Distribution and Optional Times for
Commencement of Distribution. The Vested Account Balance of a
Participant to which Section 24.03 above does not apply, shall be
distributed in a form determined according to this Section.
(a) Unless the Participant elects an optional form of
distribution pursuant to a Qualified Election or a Special
Qualified Election within 90 days before his or her Annuity
Starting Date, the Participant's Vested Account Balance shall be
paid in the form of a Qualified Joint and Survivor Annuity.
(b) If the Participant was eligible to receive a
Qualified Joint and Survivor Annuity and he or she elects an
optional form of distribution set forth in Article X pursuant to
a Qualified Election or a Special Qualified Election within
90 days before his or her Annuity Starting Date, then the
Participant's Vested Account Balance will be distributed in the
form selected by the Participant and the provisions of Article X
shall apply.
(c) All annuity contracts purchased and distributed by
the Plan to a Participant or a Beneficiary shall be
nontransferable when distributed and the terms of such contracts
shall comply with the requirements of the Plan.
24.06 Elections for Former Participants. An opportunity
to make the applicable distribution elections discussed in this
Section must be given to any living former Participant who had
not begun receiving benefits from this Plan on August 23, 1984
and who would not otherwise receive the benefit forms prescribed
by Section 24.05 above.
(a) In the case of a former Participant who:
(i) would have been entitled to receive his or
her benefits in the form of a life annuity had he or she
completed an Hour of Service during a Plan Year commencing after
December 31, 1984,
(ii) was credited with Service under this Plan or
a predecessor plan in a plan year beginning after December 31,
1975, and
(iii) had at least ten years of Vesting
Service when he or she separated from Service,
the former Participant must be given an opportunity to elect to
receive his or her benefits in accordance with the provisions of
Section 24.05 above.
(b) In the case of a former Participant:
(i) who was credited with service under this Plan
or a predecessor plan after September 1, 1974;
(ii) who was not credited with service under this
plan or a predecessor plan in a plan year beginning after
December 31, 1975; and
(iii) whose benefits would have been payable
in the form of a life annuity, the Participant must be given an
opportunity to elect to receive his or her benefits in accordance
with the provisions of Section 24.08 below.
(c) In the case of a former Participant who:
(i) satisfies the requirements of subsection (a)
but does not exercise the election made available to him or her
in subsection (a), or
(ii) satisfies the requirements of subsection (a)
other than the requirement of paragraph (iii), the former
Participant shall have his or her benefits distributed in
accordance with the provisions of Section 24.08 below.
24.07 Election Period for Certain Elections by Separated
Participants. The period during which a former Participant
entitled to make an election pursuant to Section 24.06 above
shall commence on August 23, 1984 and end on the earlier of the
former Participant's death or the date benefits would otherwise
commence to said former Participant.
24.08 Benefit Form for Certain Former Participants. The
benefits of a former Participant who is entitled to elect, and
has elected to have his or her benefits distributed pursuant to
this Section or a former Participant whose benefits are required
to be distributed in accordance with the provisions of this
Section shall be distributed in accordance with the following
provisions:
(a) If benefits in the form of a life annuity become
payable to a married former Participant who:
(i) begins to receive payments under the Plan on
or after Normal Retirement Age; or
(ii) dies on or after Normal Retirement Age while
still working for the Employer; or
(iii) begins to receive payments prior to
Normal Retirement Age; or
(iv) separates from Service on or after attaining
Normal Retirement Age (or the qualified early retirement age)
after satisfying the eligibility requirement for the payment of
benefits under the Plan and thereafter dies before beginning to
receive such benefits; then such benefits will be received under
this plan in the form of a Qualified Joint and Survivor Annuity,
unless the former Participant has elected otherwise during the
election period. For this purpose, the election period must
begin at least six months before the Participant attains
qualified early retirement age and end not more than 90 days
before the commencement of benefit distributions. Any election
hereunder must be in writing and delivered to the Administrator;
such election may be changed by the former Participant at any
time by delivery of written notification of such change and/or a
separate written election to the Administrator.
(b) A former Participant who is employed at the start
of the election period defined below will be given the
opportunity to elect, during such election period, to have a
survivor annuity payable on death. If the former Participant
elects the survivor annuity, payments under such annuity must not
be less than the payments which would have been made to the
Spouse under the Qualified Joint and Survivor Annuity if the
former Participant had retired on the day before his or her
death. Any election under this provision must be in writing and
delivered to the Administrator; such election may be changed by
the former Participant at any time by delivery of written
notification of such change and/or a separate written election to
the Administrator. The election period begins on the later of
(i) the 90th day before the former Participant attains the
qualified early retirement age or (ii) the date on which
participation begins, and ends on the date the former Participant
terminates employment with the Employer.
(c) The qualified early retirement age referred to in
this Section shall mean the latest of:
(i) the earliest date, under the Plan, on which
the former Participant may elect to receive retirement benefits:
(ii) the first day of the 120th month beginning
before the former Participant reaches Normal Retirement Age: or
(iii) the date the former Participant began
participation.
24.09 Notice of Waivability of Qualified Preretirement
Survivor Annuity.
(a) In the case of a Participant who is scheduled to
receive Qualified Preretirement Survivor Annuity coverage
pursuant to Section 24.03 hereof, the Administrator shall provide
to the Participant within the applicable period as determined
pursuant to subsection (b) below, a written explanation of:
(i) the terms and conditions of a Qualified Preretirement
Survivor Annuity; (ii) the Participant's right to make, and the
effect of, an election to waive Qualified Preretirement Survivor
Annuity coverage; (iii) the rights of a Participant's Spouse; and
(iv) the Participant's right to make, and the effect of, a
revocation of a previous election to waive Qualified
Preretirement Survivor Annuity coverage.
(b) The applicable period during which the
Administrator shall provide the written explanation described in
subsection (a) above shall mean, with respect to a given
Participant, whichever of the following periods ends last:
(i) The period beginning when the individual
becomes a Participant and ending a reasonable period of time
thereafter;
(ii) The period beginning on the first day of the
Plan Year during which the Participant attains age 32 and ending
on the last day of the Plan Year during which the Participant
attains age 34;
(iii) The period that begins with a
Participant's separation from Service when the Participant
separates from Service before attaining age 35 and ends a
reasonable period of time after such separation from Service;
(iv) The period of time that begins on the
effective date of a Plan amendment which causes the Plan to no
longer fully subsidize the cost of the Qualified Preretirement
Survivor Annuity and ends a reasonable period of time after the
effective date of such an amendment; or
(v) The period of time which begins when Section
24.03(a) above first applies in the case of the Participant and
ends a reasonable period of time thereafter.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events described in
(i), (iv) and (v) is the end of the two-year period beginning one
year prior to the date the applicable event occurs and ending one
year after that date. In the case of a Participant who separates
from service before the Plan Year in which age 35 is attained,
notice shall be provided within the two-year period beginning one
year prior to separation and ending one year after separation.
If such a Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be
redetermined.
24.10 Notice of Waivability of Qualified Joint and
Survivor Annuity. In the case of a Participant who is scheduled
to receive a Qualified Joint and Survivor Annuity pursuant to the
provisions of Section 24.05 hereof, the Administrator shall
provide to the Participant, no less than 30 days and no more than
90 days prior to the annuity starting date, a written explanation
of: (a) the terms and conditions of a Qualified Joint and
Survivor Annuity; (b) the Participant's right to make, and the
effect of, an election to waive distribution in the form of a
Qualified Joint and Survivor Annuity; (c) the rights of the
Participant's Spouse; and (d) the Participant's right to make,
and the effect of, a revocation of a previous election to waive
distribution in the form of the Qualified Joint and Survivor
Annuity. Distribution to a Participant may commence seven days
after the foregoing explanation is given, provided that:
(i) the Administrator clearly informs the
Participant that the Participant has a right to a period of at
least 30 days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(ii) the Participant, after receiving the
explanation, affirmatively elects a distribution.
ARTICLE XXV. MISCELLANEOUS
25.01 Misrepresentation. Notwithstanding any other
provision herein, if an Employee misrepresents his or her age or
any other fact, any benefit payable hereunder shall be the
smaller of: (a) the amount that would be payable if no facts had
been misrepresented, or (b) the amount that would be payable if
the facts were as misrepresented.
25.02 No Enlargement of Plan Rights. It is a condition
of the Plan, and each Participant by participating herein
expressly agrees, that he or she shall look solely to the assets
of the Trust for the payment of any benefit under the Plan.
25.03 No Enlargement of Employment Rights. Nothing
appearing in or done pursuant to the Plan shall be construed (a)
to give any person a legal or equitable right or interest in the
assets of the Trust or distribution therefrom, nor against the
Employer, except as expressly provided herein or (b) to create or
modify any contract of employment between the Employer and any
Employee or obligate the Employer to continue the services of any
Employee.
25.04 Written Orders. In taking or omitting to take any
action under this Plan, the Trustee may conclusively rely upon
and shall be protected in acting upon any written orders from or
determinations by the Employer or the Administrator as
appropriate, or upon any other notices, requests, consents,
certificates or other instruments or papers believed by it to be
genuine and to have been properly executed, and so long as it
acts in good faith, in taking or omitting to take any other
action.
25.05 No Release from Liability. Nothing in the Plan
shall relieve any person from liability for any responsibility
under Part 4 of Title I of the Act. Subject thereto, neither
Trustee, Loan Trustee, Administrator or Distributor nor any other
person shall have any liability under the Plan, except as a
result of negligence or wilful misconduct, and in any event the
Employer shall fully indemnify and save harmless all persons from
any liability except that resulting from their negligence or
wilful misconduct.
25.06 Discretionary Actions. The Administrator shall
have discretionary authority to determine eligibility for
benefits and construe the terms of the Plan. Any discretionary
action, including the granting of a loan pursuant to Article XII
hereof, to be taken by the Employer or the Administrator under
this Plan shall be non-discriminatory in nature and all Employees
similarly situated shall be treated in a uniform manner.
25.07 Headings. Headings herein are primarily for
convenience of reference, and if they conflict with the text, the
text shall control.
25.08 Applicable Law. This Plan and Trust shall, to the
extent state law is applicable, be construed and enforced in
accordance with, and the rights of the parties shall be governed
by, the laws of the state in which (a) if the Trustee is a
corporation, the Trustee has its principal place of business;
(b) if the Trustee is an individual, the Trustee resides; or
(c) if the Trustee is individuals, where a majority of the
individuals serving as Trustee reside. The Employer's execution
of the Adoption Agreement may be acknowledged where required by
applicable law.
25.09 No Reversion. Notwithstanding any other contrary
provision of the Plan, but subject nevertheless to Articles V and
XVIII, no part of the assets in the Trust shall revert to the
Employer, and no part of such assets, other than that amount
required to pay taxes or administrative expenses, shall be used
for any purpose other than exclusive benefit of Employees or
their Beneficiaries. However, the Employer may request a return,
and this Section shall not prohibit return, of an amount to the
Employer under any of the following circumstances:
(a) if the amount was all or part of an Employer
Contribution which was made as a result of a mistake of fact and
the amount contributed or, if less, the then current value is
returned to the Employer within one year after the date on which
the mistaken payment of the contribution was made, or
(b) if the amount was all or part of an Employer
Contribution which was conditioned on deductibility under Code
Section 404, such deduction was disallowed with respect to such
amount and this condition is not satisfied and the amount is
returned to the Employer within one year after the date on which
the deduction is disallowed, or
(c) if the amount was all or part of an Employer
Contribution which was conditioned on the initial qualification
of the Plan under Code Section 401(a), the Plan receives an
adverse determination with respect to this qualification and the
amount is returned to the Employer within one year after the date
on which such adverse determination is made, but only if the
application for the determination is made by the time prescribed
by law for filing the Employer's return for the taxable year in
which the Plan was adopted, or such later date as the Secretary
of Treasury may prescribe.
For the purposes of this Section, all Employer Contributions
are conditioned on initial qualification of the Plan under Code
Section 401(a), qualification of the Plan as amended under Code
Section 401(a), and deductibility under Code Section 404.
25.10 Notices. The Employer will provide the notice to
other interested parties contemplated under Code Section 7476
before requesting a determination by the Secretary of the
Treasury or his or her delegate with respect to the qualification
of the Plan.
25.11 Conflict. In the event of any conflict between
the provisions of this Plan and the terms of any contract or
agreement issued thereunder or with respect thereto, the
provisions of the Plan shall control. In particular, the
proceeds of any life insurance contract purchased by the Trustee
and not governed by an effective Designation of Beneficiary form
shall be paid to the Participant's Spouse regardless of who is
named as the beneficiary or beneficiaries in the contract.
25.12 Prior Benefits. If the optional form of benefits
under the Plan prior to adoption of the Prototype 401(k) Plan
(the "Prior Benefits") were different than the optional form of
benefits as provided in the Prototype 401(k) Plan, then the
portion of a Participants' Account which are attributable to
participation in the Plan prior to adoption of the Prototype
401(k) Plan shall be subject to such Prior Benefits and, in the
discretion of the Administrator the remaining portion of the
Participants' Account shall also be subject to such Prior
Benefits. The Administrator shall notify the Trustee as to what
portion, if any, of the Participants' Account is subject to such
Prior Benefits and give a full description of such Prior
Benefits; and, separate accounts shall be maintained for each
type of contribution (as provided in Section 7.03) for such
portion.
SCUDDER 401(k) PLAN
Adoption Agreement
The undersigned (the "Employer") establishes or amends The
AERC 401(k) Savings Plan by completing this Adoption Agreement,
adopting or amending the Plan in the form of the Prototype 401(k)
Plan attached.
I. ELIGIBILITY
A. To become a Participant who is eligible to make a
salary reduction election and/or to receive allocations
of Deferred Cash Contributions, an Employee need not
complete any period of Service
[ x ] or, if this box is checked, an Employee must
complete:
[ x ] (1) 1 Year of Service (insert no more
than "1").
[ ] (2) _______ consecutive months of service
(insert no more than "12"; no minimum number
of hours can be required).
B. An Employee who meets the above requirements for
eligibility to make a salary reduction election and/or
to receive allocations of Deferred Cash Contributions
shall become such an eligible Participant on the first
day the requirements are met
[x ] or, if this box is checked, on the first day of
the next month
[ ] or, if this box is checked, on the first day of
the next pay period
[ ] or, if this box is checked, on the first day of
the next quarter of the Plan Year.
[ ] or, if this box is checked, on the first day of
the next Plan Year, or the first day of the
seventh month of the Plan Year, whichever is
earlier.
C. To become a Participant who is eligible to receive
allocations of Employer Matching Contributions and/or
Employer Profit Sharing Contributions and to make
Nondeductible Voluntary Contributions (if permitted by
Section XIII), an Employee must complete 1 Year of
Service
[ ] or, if this box is checked, an Employee must
complete Year(s) of Service, (insert "2" or
less; select more than 1 only if the Employer
selects full and immediate vesting in Section V.A.
and B. below; insert "0" for no waiting period).
D. An Employee who meets the above requirements for
eligibility to receive allocations of Employer Matching
Contributions and/or Employer Profit Sharing
Contributions and to make Nondeductible Voluntary
Contributions (if permitted by Section XIII) shall
become such an eligible Participant on the first day
the requirements are met
[x ] or, if this box is checked, on the first day of
the next month
[ ] or, if this box is checked, on the first day of
the next pay period
[ ] or, if this box is checked, on the first day of
the next quarter of the Plan Year
[ ] or, if this box is checked, on the first day of
the next Plan Year, or the first day of the
seventh month of the Plan Year, whichever is
earlier.
E. The number of Hours of Service required to have a Year
of Service is 1000
[ ] or, if this box is checked, (insert less
than "1000").
F. A Year of Service (for the purpose of eligibility)
shall be measured on the 12-consecutive-month period
beginning on the Employee's initial date of employment
and reemployment or an anniversary of that date
[x ] or, if this box is checked, on the
12-consecutive-month period beginning on the
Employee's initial date of employment or
reemployment and each Plan Year commencing
thereafter.
G. For purposes of calculating periods of Service, the
Employer shall calculate periods of Service based on an
actual count of the Hours of Service an Employee
performs
[ ] or, if this box is checked, an Employee shall be
credited with 45 Hours of Service for each week
during which the Employee performs an actual Hour
of Service.
H. Before an Employee may become a Participant, the
Employee need not attain any minimum age
[x ] or, if this box is checked, an Employee must be at
least 21 (insert "21" or less) years of age.
I. All Employees are entitled to be Participants except
(one or more may be selected):
[x ] Non-resident aliens who receive no earned income
from the Employer which constitutes income from
sources within the United States;
[x ] Individuals covered by a collective bargaining
contract which meets the requirements specified in
the Plan;
[ ] Salaried Employees;
[ ] Hourly-paid Employees;
[x ] Leased Employees;
[ ] Piece-rate Employees;
[ ] Employees paid by commission;
[ ] Employees covered by another retirement plan to
which the Employer is required to contribute;
[x ] Employees of the following subsidiaries or
affiliates:
Merit Painting Company, Rainbow Terrace
Apartments, Inc. and any other entity not
participating under the Plan on June 30, 1997,
which is not approved for participation by the
Administrator
[ ] Employees in the following non-discriminatory
classification:
Note: If Employees are excluded from the Plan under one or
more of the classifications above (not including the first
two classifications) the Plan must satisfy, on a continuing
basis, the coverage, nondiscrimination, and participation
requirements of Code Sections 410(b), 401(a)(4), and
401(a)(26).
II. SALARY REDUCTIONS AND DEFERRED CASH CONTRIBUTIONS
For each Plan Year, the Employer will make the following
contribution to the Trust on behalf of each eligible
Participant:
A. [x ] A Salary Reduction Contribution equal to the
portion of the Compensation otherwise payable to
the Participant that the Participant has elected
to contribute to the Trust. The Participant's
election shall specify the portion of the
Compensation to be contributed, which amount shall
be not less than 1% (insert "0" or more, but
not more than the next chosen number) and not more
than 12 % (insert "20" or less, but not less than
the previously chosen number) of the Participant's
Compensation for the Plan Year.
B. [ ] A Deferred Cash Contribution equal to that portion
of the Deferred Cash Allocation which the eligible
Participant has not elected to receive in cash.
The Deferred Cash Allocation for this purpose
shall be an amount equal to the percentage of the
eligible Participant's Compensation as is
determined by the Employer for each Plan Year
(which percentage shall be the same for each
Participant)
[ ] or, if this box is checked, % of the eligible
Participant's Compensation.
C. A Participant shall be entitled to a Deferred Cash
Allocation and a Deferred Cash Contribution for a Plan
Year if the Participant receives Compensation from the
Employer during the Plan Year
[ ] and, if this box is checked, the Participant is
employed on the last day of the Plan Year and is
credited with at least _____ (insert "1000" or
less) Hours of Service during the Plan Year, or
the Participant retires, dies or becomes disabled
during the Plan Year.
III. PROFIT SHARING CONTRIBUTIONS
For each Plan Year, the Employer will not make an Employer
Profit Sharing Contribution
[ ] or, if this box is checked, the Employer will make an
Employer Profit Sharing Contribution.
A. [ ] Fixed Formula
For each Plan Year, the Employer will make an Employer
Profit Sharing Contribution to the Trust in an amount
equal to ____% (not to exceed 15%) of each such
eligible Participant's Compensation.
A Participant shall be entitled to an allocation of the
fixed Employer Profit Sharing Contribution for a Plan
Year if the Participant receives Compensation from the
Employer during a Plan Year
[ ] and, if this box is checked, the Participant is
employed on the last day of the Plan Year, or the
Participant retires, dies or becomes disabled
during the Plan Year.
[ ] and, if this box is checked, the Participant is
credited with at least _______ (insert "1000" or
less) Hours of Service during the Plan Year, or
the Participant retires, dies or becomes disabled
during the Plan Year.
B. [ ] Discretionary Formula
For each Plan Year, the Employer will make an Employer
Profit Sharing Contribution to the Trust equal to the
amount, if any, determined by the Employer for such
Plan Year.
A Participant shall be entitled to an allocation of the
discretionary Employer Profit Sharing Contribution for
a Plan Year if the Participant receives Compensation
from the Employer during the Plan Year
[ ] and, if this box is checked, the Participant
is employed on the last day of the Plan Year,
or the Participant retires, dies or becomes
disabled during the Plan Year.
[ ] and, if this box is checked, the Participant
is credited with at least _______ (insert
"1000" or less) Hours of Service during the
Plan Year, or the Participant retires, dies
or becomes disabled during the Plan Year.
C. Employer Profit Sharing Contributions will be
allocated to eligible Participants in the ratio
that each eligible Participant's Compensation for
the Plan Year bears to the total Compensation paid
to all eligible Participants for the Plan Year, or
[ ] if this box is checked, on an integrated
basis in accordance with the provisions of
Section 4.03(b)(ii) of the Plan.
The Integration Level for a Plan Year will be the
Social Security Wage Base for such Plan Year
[ ] or, if this box is checked, $________ (not in
excess of the Social Security Wage Base).
[ ] or, if this box is checked, _____% of the
Social Security Wage Base (not in excess of
100%).
The Integration Rate for a Plan Year will be the
Maximum Disparity Rate for such Plan Year.
[ ] or if this box is checked, ____% (not in
excess of the Maximum Disparity Rate).
Note: An Employer may elect to integrate the Plan with
Social Security only if the Employer does not maintain
another qualified retirement plan integrated with
Social Security.
IV. MATCHING CONTRIBUTIONS
A. For each Plan Year, the Employer will not make an
Employer Matching Contribution
[x ] or, if this box is checked, the Employer will make
an Employer Matching Contribution on behalf of
each eligible Participant who, pursuant to Section
VI below, is eligible to receive an allocation;
such contribution shall be equal to the percentage
indicated in (B) below of aggregate:
[x ] (1) Salary Reduction Contributions
[ ] (2) Deferred Cash Contributions
[ ] (3) Nondeductible Voluntary Contributions
A Participant shall be entitled to an allocation of the
Employer Matching Contribution for a Plan Year if the
Participant makes contributions indicated above for the Plan
Year
[ ] and, if this box is checked, the Participant is
employed by the Employer on the last day of the
Plan Year, or the Participant retires, dies or
becomes disabled during the Plan Year.
[ ] and, if this box is checked, the Participant is
credited with at least ____________ Hours of
Service (insert "1000" or less) during the Plan
Year, or the Participant retires, dies or becomes
disabled during the Plan Year.
B. The Employer Matching Contribution made on behalf of
each eligible Participant shall be equal to a
percentage of the Participant's contributions selected
in (A) above; which percentage shall be equal to:
[ ] (1) ____%
[ x ]* (2) the sum of _25__% of the first __4__% of
the Participant's Compensation, plus __0__%
of the next __8__% of the Participant's
Compensation.
[ ] (3) the sum of ___% of such contributions up to
______ dollars, plus ____% of such contributions
which are in excess of ________ dollars.
[ ] (4) the percentage voted or declared by the
Employer for the Plan Year.
* Employer matching contributions will be determined
with respect to salary reduction contributions for each
payroll period.
NOTE: If (2) or (3) above are completed with the second
matching percentage (following the word "plus") greater than
the first matching percentage (following the words "the sum
of"), the IRS may deem the plan to be discriminatory under
Code Section 401(a)(4).
C. The Employer Matching Contribution* shall be limited as
follows:
[ ] (1) A Participant's aggregate contributions
indicated in (A) above for a Plan Year in excess
of ____% of the Participant's Compensation shall
not be matched.
[ ] (2) A Participant's aggregate contributions
indicated in (A) above for a Plan Year in excess
of ________ dollars shall not be matched.
[ ] (3) The Employer Matching Contribution for a
Participant for a Plan Year shall not exceed ___%
of the Participant's Compensation or __________
dollars.
V. QUALIFIED NONELECTIVE CONTRIBUTIONS AND QUALIFIED MATCHING
CONTRIBUTIONS
For each Plan Year, the Employer will not make a Qualified
Nonelective Contribution or a Qualified Matching
Contribution
[x ] or, if this box is checked, in any Plan Year in which
the Plan cannot satisfy one or more of the
non-discrimination tests set forth in Article VI, the
Employer may make a Qualified Nonelective Contribution
and/or Qualified Matching Contribution to the Trust in
an amount sufficient to enable the Plan to satisfy such
tests.
VI. VESTING OF EMPLOYER CONTRIBUTIONS
NOTE: Make selections in Section VI. only if Employer
Profit Sharing Contributions and/or Employer Matching
Contributions have been selected.
A. Employer Profit Sharing Contributions shall be
immediately vested and nonforfeitable
[ ] (1) or, if this box is checked, vested at the
rate specified in Column 1 below.
[ ] (2) or, if this box is checked, vested at the
rate specified in Column 2 below.
[ ] (3) or, if this box is checked, vested at the
rate specified in Column 3 below.
[ ] (4) or, if this box is checked, vested at the
rate specified in Column 4 below which rate
shall, if a graded rate is specified, be at
least as rapid as the rate specified in
Column 2 below or, if a cliff rate is
specified, be at least as rapid as the rate
specified in Column 3 below.
<TABLE>
<CAPTION>
Column 1 Column 2 Column 3 Column 4
Vesting Top-Heavy 7-Year 5-Year Percentage
Years Vesting Rate Graded Rate Cliff Rate Elected
<S> <C> <C> <C> <C>
1 0% 0% 0%
2 20% 0% 0%
3 40% 20% 0%
4 60% 40% 0%
5 80% 60% 100%
6 100% 80% 100%
7 100% 100% 100%
</TABLE>
NOTE: Employer Profit Sharing Contributions must be immediately
vested and nonforfeitable if the Employer makes the election in
Section I.C. above and requires Employees to complete more than
one Year of Service.
B. Employer Matching Contributions shall be immediately
vested and nonforfeitable
[ ] (1) or, if this box is checked, vested at the
rate specified in Column 1 below
[ ] (2) or, if this box is checked, vested at the
rate specified in Column 2 below
[ ] (3) or, if this box is checked, vested at the
rate specified in Column 3 below
[ ] (4) or, if this box is checked, vested at the
rate specified in Column 4 below which rate
shall, if a graded rate is specified, be at
least as rapid as the rate specified in
Column 2 below, or, if a cliff rate is
specified, be at least as rapid as the rate
specified in Column 3 below.
<TABLE>
<CAPTION>
Column 1 Column 2 Column 3 Column 4
Vesting Top-Heavy 7-Year 5-Year Percentage
Years Vesting Rate Graded Rate Cliff Rate Elected
<S> <C> <C> <C> <C>
1 0% 0% 0%
2 20% 0% 0%
3 40% 20% 0%
4 60% 40% 0%
5 80% 60% 100%
6 100% 80% 100%
7 100% 100% 100%
</TABLE>
NOTE: Employer Matching Contributions must be immediately vested
and nonforfeitable if the Employer makes the election in Section
I.C. above and requires Employees to complete more than one Year
of Service.
C. The following Service will not be included in
determining Vesting Years unless checked below:
[x ] (1) Service before the Employer maintained this
Plan or a predecessor plan.
[ ] (2) Service before the first Plan Year during
which a Participant attained age 18.
[x ] (3) Service before the first Plan Year to which
ERISA is applicable, if this Plan is a
continuation of an earlier plan which would
have disregarded such service.
D. Vesting Years and One-Year Breaks in Service for the
purpose of vesting shall be measured on the
12-consecutive-month period beginning on the
Participant's initial date of employment or an
anniversary of that date
[x ] or, if this box is checked, on the Plan Year.
E. The Participant will have a Vesting Year only if the
Participant is credited with at least 1000 Hours of
Service
[ ] or, if this box is checked, ___________ (insert
less than "1000").
F. If the Plan becomes a Top-Heavy Plan but thereafter
ceases to be a Top-Heavy Plan, the vesting schedule in
effect while the Plan was a Top-Heavy Plan will
continue to be in effect for all existing and future
Participants
[ ] or, if this box is checked, the vesting schedule
selected in Sections VI.A. or B. above, as the
case may be, will apply for all Plan Years during
which the Plan is not a Top-Heavy Plan.
VII. SPECIAL RULES FOR ALLOCATIONS OF EMPLOYER CONTRIBUTIONS
A. An otherwise eligible Participant who is a Highly
Compensated Employee for a given Plan Year shall
receive an allocation of any Employer Profit Sharing
Contributions made pursuant to Section III. above and
any reallocated forfeitures
[ ] or, if this box is checked, shall not receive an
allocation of any Employer Profit Sharing
Contributions made pursuant to Section III. above
and any reallocated forfeitures.
B. An otherwise eligible Participant who is a Highly
Compensated Employee for a given Plan Year shall
receive an allocation of any Employer Matching
Contributions made pursuant to Section III.B. above and
any reallocated forfeitures
[ ] or, if this box is checked, shall not receive an
allocation of any Employer Matching Contributions
made pursuant to Section IV. above and any
reallocated forfeitures.
C. Any minimum Top-Heavy allocations will be made first
from this Plan
[ ] or, if this box is checked, first from the
_______________ Plan (insert name of another
qualified retirement plan maintained by the
Employer).
D. For any Plan Year for which the Plan is a Top-Heavy
Plan, minimum allocations shall be made in accordance
with the provisions of Section 23.03
[ ] or, if this box is checked, because the Employer
maintains at least one other qualified retirement
plan, minimum allocations shall be made at the
following rate of Compensation: ____% (insert "3"
or more).
Note: Only consider checking the box in Section VII.D. if
the Employer sponsors two or more tax-qualified retirement
plans and either (1) one of those plans is a defined benefit
plan or (2) the plans do not have identical eligibility
requirements.
VIII. REALLOCATION OF FORFEITURES
Any forfeiture which results from a Participant's
termination of Service shall be reallocated as if it were a
contribution of the same type (i.e., Employer Profit Sharing
Contribution or Employer Matching Contribution) for the Plan
Year following the Plan Year in which such forfeiture occurs
[x ] or, if this box is checked, such forfeiture shall be
applied to reduce the Employer's obligation to make
Employer Matching Contributions and fixed Profit
Sharing Contributions for the Plan Year during which
the forfeiture occurs.
IX. COMPENSATION
A. Compensation shall be defined as follows for the
purposes designated below:
[x ] (1) W-2 Compensation. Compensation as reported
on Form W-2 and as more fully defined in
Section 2.09(a)(i) of the Plan.
The above definition of Compensation shall
apply for the purposes of allocating or
determining:
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[ ] Employer Matching Contributions
[x ] Non-discrimination tests contained in
Article VI of the Plan.
[x ] Section 415 Limitations onAllocations
[ ] (2) 415 Safe Harbor Compensation. "Compensation"
as defined in Section 5.05(b)(ii) of this
Plan.
The above definition of Compensation shall
apply for the purposes of allocating or
determining:
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[ ] Employer Matching Contributions
[ ] Non-discrimination tests contained in
Article VI of the Plan.
[ ] Section 415 Limitations on Allocations
[x ] (3) Safe Harbor Alternative Definition. 415 Safe
Harbor Compensation, reduced by all of the
following items (even if includible in gross
income): reimbursement or other expense
allowances, fringe benefits (cash and
non-cash), moving expenses, deferred
compensation, and welfare benefits.
The above definition of Compensation shall
apply for the purposes of allocating or
determining:
[x ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[x ] Employer Matching Contributions
[ ] Non-discrimination tests contained in
Article VI of the Plan.
[ ] Section 415 Limitations on Allocations
[ ] (4)a.Non Safe Harbor Alternative Definition.
Compensation as indicated above but
excluding:
[ ] overtime pay, premiums for shift
differential and call-in premiums;
[ ] bonuses;
[ ] commissions;
[ ] such other items as follows:
_________________________________
_________________________________
The above definition of Compensation shall apply for
the purposes of allocating or determining
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
(non-integrated formula only)
[ ] Employer Matching Contributions.
b. Non Safe Harbor Alternative Definition.
Compensation as indicated above but excluding:
[ ] overtime pay, premiums for shift
differential and call-in premiums;
[ ] bonuses;
[ ] commissions;
[ ] such other items as follows:
_____________________________
_____________________________
The above definition of Compensation shall
apply for the purposes of allocating or
determining
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
(non-integrated formula only)
[ ] Employer Matching Contributions.
NOTE: If the Employer elects an alternative definition of
Compensation by making a reduction pursuant to this IX.A.4
for purposes of allocating Employer Profit Sharing
Contributions, then such alternative definition must be
tested by the Administrator to show that it meets the
nondiscrimination requirements of Section 414(s)(3) of the
Code.
B. Compensation
[ x ] shall include [ ] shall not include
A Participant's Salary Reduction Contributions,
Deferred Cash Contributions (which the Participant did
not elect to take in cash) and other amounts which are
excluded from an Employee's gross income pursuant to
Code Sections 125, 402(a)(8), 402(h)(l)(B), and 403(b).
The above rule shall apply for the purposes of
allocating or determining
[ ] Employer Profit Sharing Contributions
[x] Employer Matching Contributions
[x] Non-discrimination tests contained in Article VI
of the Plan.
C. Compensation
[ ] shall include [x ] shall not include
amounts paid during that portion of the Plan Year
during which the Employee is not eligible to
participate in the Plan with respect to the allocation
of Employer Profit Sharing Contributions and/or
Employer Matching Contributions.
The above rule shall apply for the purposes of
allocating or applying
[ ] Employer Profit Sharing Contributions
[x] Employer Matching Contributions
[x ] Section 401(m) non-discrimination test contained
in Article VI of the Plan.
D. Compensation for purposes of applying the Section
401(k) non-discrimination test contained in Article VI
of the Plan.
[ ] shall include [ x ] shall not include
amounts paid during that portion of the Plan Year
during which the Employee is not eligible to make a
salary reduction election and/or to receive allocations
of Deferred Cash Contributions.
NOTE: Participant's Salary Reduction
Contributions, Deferred Cash Contributions (which
the Participants do not elect to take in cash) and
other amounts which are excluded from an
Employee's gross income pursuant to Code Sections
125, 402(a)(8), 402(h)(1)(B), and 403(b) are not
considered compensation for purposes of
determining the Employer's permissible deduction
under Code Section 404 or for purposes of applying
the limitations on allocations to Participants'
Accounts under Article V of the Plan and Code
Section 415.
X. NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date shall be age 59-1/2
[x ] or, if this box is checked, age __65_____ (insert more
than 59-1/2 but not more than 65).
XI. IN-SERVICE HARDSHIP WITHDRAWALS
A. In-service withdrawals by a Participant from his or her
Employer Profit Sharing Contribution Account shall not
be permitted unless the Participant has attained his or
her Normal Retirement Date
[ ] or, if this box is checked, a Participant who has
not attained his or her Normal Retirement Date and
who is fully vested in his or her Employer Profit
Sharing Contribution Account may request an
in-service withdrawal from such account in case of
hardship.
B. In-service withdrawals by a Participant from his or her
Employer Matching Contribution Account shall not be
permitted unless the Participant has attained his or
her Normal Retirement Date
[ ] or, if this box is checked, a Participant who has
not attained his or her Normal Retirement Date and
who is fully vested in his or her Employer
Matching Contribution Account may request an
in-service withdrawal from such account in case of
hardship.
C. In-service withdrawals by a Participant from his or her
Salary Reduction Contribution Account, Deferred Cash
Contribution Account and Qualified Nonelective
Contribution Account shall not be permitted unless the
Participant has attained his or her Normal Retirement
Date
[x ] or, if this box is checked, a Participant who has
not attained his or her Normal Retirement Date may
request an in-service withdrawal from his or her
Salary Reduction Contribution Account and Deferred
Cash Contribution Account in case of hardship.
XII. DISTRIBUTION OPTIONS
A Participant (or Beneficiary to the extent permitted under
the Plan) may elect to receive a distribution of his or her
vested Account balance in one or more of the following
optional forms:
[x ] (1) Distribution of the Participant's entire
vested Account balance in monthly
installments over a period equal to the
shorter of 120 months or the Applicable Life
Expectancy.
[x ] (2) Distribution of the Participant's entire
vested Account balance in a lump sum.
[x ] (3) Distribution of the Participant's entire
vested Account balance in installment
payments of a fixed amount, such payments to
be made until exhaustion of the Participant's
vested Account balance.
[x ] (4) Distribution in kind.(Securities issued by
Employer only.)
[x ] (5) Any reasonable combination of the foregoing
or any reasonable time or manner of
distribution within the above-stated
limitations as elected by the Participant (or
Beneficiary to the extent permitted under the
Plan).
XIII. NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS
Nondeductible Voluntary Contributions by a Participant are
not permitted
[ ] or, if this box is checked, are permitted.
XIV. INVESTMENT
Investment decisions with respect to all contribution
sources shall be made by the Participant
[ ] or, if this box is checked, by the Administrator with
respect to all contribution sources.
[ ] or, if this box is checked, by the Administrator with
respect to Employer Matching Contributions, Employer
Profit Sharing Contributions, Qualified Nonelective
Contributions and Qualified Matching Contributions.
XV. LOANS
Loans to a Participant are not permitted
[x ] or, if this box is checked, are permitted.
Note: If you elect to permit loans to Participants,
you must designate a Loan Trustee in Section XX.
Scudder Trust Company will not act as Loan Trustee
unless it expressly agrees to act as such.
XVI. EFFECTIVE DATE
The Effective Date of this Plan or Amendment shall be the
first day of the Employer's fiscal year during which the
Plan is adopted or amended
[x ] or, if this box is checked, ___July 1,
1997________________.
(insert date)
XVII. PLAN AND LIMITATION YEARS
A. The Plan Year shall be the same as the fiscal year of
the Employer
[ ] or, if this box is checked, shall end on the last
day of the month of ____________.
B. The Limitation Year shall be the Plan Year
[ ] or, if this box is checked, shall be the
12-consecutive month period ending on the last day
of the month of _______________.
XVIII. AMENDMENT
Execution of this Adoption Agreement is not an amendment to
an existing plan
[x ] or, if this box is checked, is an amendment to an
existing plan
XIX. CALCULATION OF TOP HEAVY RATIO
If the Employer has maintained, now or subsequently
maintains one or more defined benefit plans, then, for
purposes of calculating the Top-Heavy Ratio, Present Value
shall be based upon the interest rate and mortality table
employed as of the date in question for such purpose as
specified in the most recently adopted or amended defined
benefit plan maintained by the Employer
[ ] or, if this box is checked, the interest rate and
mortality table specified below.
Interest Rate: ________%
Mortality Table: ________
XX. APPOINTMENT OF TRUSTEES
The Employer hereby designates the following Trustees:
A. Scudder Trust Company shall act as Trustee under this
Trust with respect to all assets of Plan except as
provided below.
B. _________________ shall act as Trustee with respect to
_________________.
C. _________________ shall act as Trustee with respect to
_________________.
D. Dennis W. Bikun, Lita Weiss, and Nan Zieleniec
collectively shall act as Loan Trustee.
XXI. LIMITATIONS ON ALLOCATIONS
This section applies only for an Employer who maintains or
has ever maintained: another qualified retirement plan
(other than a plan which the Employer amended into the
Prototype 401(k) Plan) in which any Participant in this Plan
is or was a participant or could possibly become a
participant, a welfare benefit fund (as defined in Code
Section 419(e)), or an individual medical account (as
defined in Code Section 415(l)(2)) under which amounts are
treated as annual additions with respect to any Participant
in this Plan.
A. If the Participant is covered under another qualified
defined contribution plan maintained by the Employer,
other than a master or prototype plan, the provisions
of Article V of the Plan will apply as if the other
plan were a master or prototype plan
[ ] or, if this box is checked, the attached rider
describes the method by which the plans will limit
total Annual Additions to the Maximum Permissible
Amount described in Section 5.05 of the Plan and
reduce any excess amount in a manner that
precludes Employer discretion.
B. If the Participant is, or has ever been, a participant
in a defined benefit plan maintained by the Employer,
the provisions of Article V of the Plan will apply
[ ] or, if this box is checked, the attached rider
describes the method by which the plans involved
will satisfy the 1.0 limitation described in
Section 5.04 of the Plan and reduce any excess
amount in a manner that precludes Employer
discretion.
XXII. SIGNATURES
The Employer (1) covenants and agrees that whenever a
Participant makes a contribution the Employer shall
ascertain that the Participant has received a copy of the
current prospectus relating to any Designated Investment or
other investment in which such contribution is to be
invested where required by any state or federal law, and (2)
by remitting any contribution to the Trustee the Employer
shall be deemed to represent that the Employer has received
a current prospectus of any investment in which it is to be
invested where required by any state or federal law.
An Employer adopting this Plan may not rely on the opinion
letter issued by the National Office of the Internal Revenue
Service as evidence that this Plan is qualified under Code
Section 401. An Employer who wishes to obtain such reliance
should apply for a determination letter from the appropriate
Key District Director of the Internal Revenue Service to
obtain reliance that the plan is qualified.
This Adoption Agreement may be used in conjunction with
basic plan document #04. Failure to properly complete this
Adoption Agreement may result in the disqualification of the
Plan.
All inquiries regarding this Plan should be made to Scudder
Investor Services, Inc. by calling 1-800-323-6105, or by
writing to Scudder Investor Services, Inc., Group Retirement
Plans Department, Two International Place, Boston, MA,
02110. Scudder Investor Services, Inc. will notify each
adopting Employer of any amendments made to, or of the
discontinuance or abandonment of, this Plan.
Trustee(s) Signature(s):
/s/ Dennis W. Bikun
----------------------------- SCUDDER TRUST COMPANY
Dennis W. Bikun, CFO /s/ Scudder Trust Company
-------------------------
Associated Estates
Realty Corporation N/A
----------------------------- ------------------------
Print Name of Employer Trustee
5025 Swetland Court N/A
----------------------------- -------------------------
Street Address Trustee
Richmond Hts, Ohio 44143-1467 /s/ Dennis W. Bikun
----------------------------- -------------------------
City, State, Zip Dennis W. Bikun,
Loan Trustee
34-1747603 /s/ Lita Weiss
----------------------------- -----------------------
Employer Tax Identification No. Lita Weiss, Loan Trustee
12/31 /s/ Nan Zieleniec
----------------------------- -------------------------
Employer's Fiscal Year Nan Zieleniec
Loan Trustee
(216) 251-5000
-----------------------------
Employer's Telephone Number
/s/ Scudder Investor
Services
(Date) May 20, 1997 ------------------------
----------------------------- Accepted by Scudder
Investor Services, Inc.
1,000
-----------------------------
Expected Number of Participants
BAKER & HOSTETLER LLP
3200 National City Center
1900 E. Ninth Street
Cleveland, OH 44114
May 20, 1997
Associated Estates Realty Corporation
5025 Swetland Court
Richmond Heights, Ohio 44143-1467
Re: AERC 401(k) Savings Plan and Trust
Gentlemen:
We have acted as counsel to Associated Estates Realty
Corporation, an Ohio corporation (the "Company"), in connection
with the Company's Registration Statement on Form S-8 (the
"Registration Statement") filed under the Securities Act of 1933,
as amended, relating to the offering of up to 45,000 Common
Shares, without par value (the "Common Shares"), of the Company
pursuant to the AERC 401(k) Savings Plan and Trust (the "Plan")
and the preparation of a Registration Statement on Form S-8
registering Common Shares, without par value (the "Common
Shares"), of the Company and interests in the Plan to be offered
and sold pursuant to the Plan. We have examined the Plan and
such documents, records and matters of law as we deem necessary
for purposes of this opinion and, based thereon, we are of the
opinion that:
1. The interests in the Plan, when offered to
Participants in the Plan in accordance with the terms of the
Plan, will be legally issued; and
2. The Common Shares of the Company which may be
issued, transferred or sold by the Company to the Plan will
be, when issued, transferred or sold in accordance with the
terms of the Plan, duly authorized, legally issued, fully
paid and nonassessable so long as the issuance or sale of
any newly issued Common Shares, or the transfer or sale of
any Common Shares held as treasury shares, is duly
authorized by the Company's Board of Directors prior to any
such issuance, transfer or sale.
The Company intends to apply for a determination letter
from the Internal Revenue Service (the "IRS") that the Plan, as
amended, continues to meet the requirements for qualification<PAGE>
under Sections 401(a) and 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"), and that the Trust Agreement is
tax exempt under the Code. We believe that the provisions of the
documents constituting the Plan and Trust Agreement substantially
comply with the requirements of the Code and the Employee
Retirement Income Security Act of 1974, as amended, pertaining to
such provisions. The IRS may, however, require changes in
provisions of the Plan and Trust Agreement documents prior to
issuing a determination letter with respect to the Plan and
related Trust Agreement. We have been advised by the Company
that it intends to comply with any reasonable request of the IRS
for changes in the documents in order to obtain such a
determination letter.
In rendering the foregoing opinion, we express no
opinion as to whether the Plan will be qualified in its operation
or whether it will meet the requirements of Section 401(k) and
410(b) of the Code, relating to nondiscrimination in
participation, or Section 401(a)(4) and other applicable
provisions of the federal tax laws relating to prohibited
discrimination in favor of officers, shareholders or highly
compensated employees, which are factual issues depending upon
the circumstances from time to time.
We hereby consent to the filing of this opinion as
Exhibit 5 to the Registration Statement on Form S-8 and to the
reference to our firm under the caption "Legal Matters" in the
prospectus which is a part of such Registration Statement.
Very truly yours,
Baker & Hostetler LLP
/s/ Suzanne Hanselman
Suzanne K. Hanselman<PAGE>
PRICE WATERHOUSE
BP America Building
200 Public Square, 27th Floor
Cleveland, Ohio 44114-2301
(216) 781-3700
To the Board of Directors and Shareholders of
Associated Estates Realty Corporation
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated February
19, 1997, which appears on page 25 of the 1996 Annual Report to
Shareholders of Associated Estates Realty Corporation, which is
incorporated by reference in Associated Estates Realty
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996. We also consent to the incorporation by
reference of our report on the Financial Statement Schedule dated
February 19, 1997, which appears on page S-1 of such annual
report on Form 10-K.
/s/ Price Waterhouse LLP
------------------------
Price Waterhouse LLP
Cleveland, Ohio
May 16, 1997<PAGE>
